|Congratulations PM Modi and Vedanta for the Semiconductor plant in Gujarat. Controversy with Maharashtra is unnecessary and politically motivated.|
This week none other than PM Modi announced over Twitter that Vedanta group will be investing 19.5 Billion dollars for its Chip fabrication unit in Gujarat (https://www.livemint.com/news/india/pm-modi-expresses-optimism-as-vedanta-to-set-up-chip-making-unit-in-gujarat-11663062019110.html). The Vedanta venture aims to start manufacturing display and chip products within two years, Vedanta Chairman Anil Agarwal told a public event in Gujarat, where an agreement was signed with the state officials. “India’s own Silicon Valley is a step closer now,” Agarwal said in a tweet after the event (https://www.reuters.com/world/india/vedanta-foxconn-sign-mou-with-modis-home-state-20-bln-chip-foray-2022-09-13/).
Vedanta will set up a display manufacturing unit with an investment of 945 billion rupees ($11.95 billion) and separate chip-related production units by investing 600 billion rupees ($7.58 billion), the state government said in its statement. Vedanta and Foxconn will work closely with the state government to establish high-tech clusters with requisite infrastructure, including land, semiconductor-grade water and power, the statement added. Gujarat pipped India’s richest state, Maharashtra, in a close race to win the plant location. Vedanta group which has also suffered a lot due to the Political and missionary alliance in the state of Tamilnadu is known for its Professional and nationalist business acumen that is comparable only to the likes of GD Birla and Tatas of the older times.
In December 2021, the Union Cabinet approved a Rs 76,000 crore incentive plan to encourage semiconductor, display manufacturing, and fabrication units in India. As part of the plan, incentives have been planned for silicon semiconductor fabrication, packaging, design, display fabrication, compound semiconductor, and silicon photonics manufacturing units.
To receive government approval to set up a semiconductor fabrication in India, companies should own a fabrication unit for semiconductor chips in the 65-28 nanometre range or possess the “production-grade licensed technologies” to make 28 nm chips.
Vedanta and few others had shown interests for the same. In February this year, the Ministry of Electronics and Information Technology said it received proposals worth Rs 1.53 lakh crore for setting up semiconductor and display fabrication units.
Vedanta has partnered with Foxconn through a 60:40 joint venture to set up an integrated display and semiconductor fabrication ecosystem. Foxconn is known for creating assembly units for electronic devices, including but not limited to mobile devices. One of the goals of the project is to make India self-reliant in electronics, through expansion of its presence across the value chain.Immediately after Anil Agrawal Chairman of Vedanta has set up multiple teams to scout for suitable locations across five states to set up its semiconductor plant, according to a senior government official aware of the conglomerate’s plans.
How Gujarat was Chosen over other states
The path to identifying the correct location was not easy. It was not only logistics and labor but also which state offered better incentives. Besides after its experience in the Tuticorin plant in Tamilnadu the group was more circumspect of political and missionary conspiracies. In an interview Chairman Anil Agrawal said that the Gujarat site was chosen on the basis of Professional and Independent advice. Moreover, such a BIG TICKET-sized project cannot be selected on the basis of any one signal dimension. Its taking everything into account and then chooses the best.
The group has identified, Tamilnadu, Maharashtra Telangana, Karnataka, and Gujarat in its list of probable. But Tamilnadu and Telangana were dropped earlier due to the political and spread of missionary interference there. It must be known that the Sterlite Copper Plant in Tuticorin has been shut for years now due to Political apathy and missionary handiwork. This is despite well-known facts about how an international plot was hatched in cooperation with Missionary organizations and the critical importance of Copper as an ingredient in many products.
Maharashtra was the only serious contender and talks were going with the state for some time. The Maharashtra government’s key offer was of a capital subsidy of up to 30 percent for setting up the plant at the Talegaon industrial area, among other incentives. The incentive package included a power tariff subsidy of Rs 1 per unit, including support to Vedanta to set up a 750 MW captive solar power generation unit. Apart from subsidies on land, water and power charges, the Maharashtra government had also offered waivers on stamp duty as well as exemption from electricity duty. The company was also offered incentives on employment generation.
Maharashtra’s Industries department had done a detailed study on-site comparison between Gujarat’s Dholera and Maharashtra’s Talegaon. The department document mentioned that Gujarat has a relatively lesser availability of skilled manpower. “Currently, no supply chain vendors and customers are present near the site. Negligible electronics manufacturing ecosystem in the state,” it said about the Gujarat site.
BUt the reason was according to sources within the Maharashtra Industries department, Gujarat’s more lucrative offer on land-related incentives. This fact has not been obviously highlighted by politicians of Maharashtra including the Thackerays and MVA party. Gujarat is also known to FAST TRACK Industrial projects at a pace that is the BEST in the country. Readers would recall how Tata’s were offered land in the state and the plant from Bengal was shifted from West Bengal by none other than Ratan Tata. At that time Modi was not PM and there were no elections pending in the state. Therefore to say that Gujarat was chosen over Maharashtra for political reasons and because fo Pressure from PM Modi is like a distraction from real issues.
What is at Stake
It is not for just political upmanship that there has been some controversy over the Gujarat issue. The importance of the project for Gujarat can be gauged from PM Modi’s tweet, in which he said, “This MoU is an important step accelerating India’s semi-conductor manufacturing ambitions. The investment of Rs 1.54 lakh crore will create a significant impact to boost the economy and jobs. This will also create a huge ecosystem for ancillary industries and help our MSMEs.”
Vedanta and Foxconn for their $22 billion investment, which can generate more than 200,000 direct and indirect jobs. The project was estimated to bring close to Rs 26,200 crore SGST, 80,000 to 1,00,000 direct and indirect job opportunities, $21 billion in direct and $5-8 billion additional investment, helping the state’s GDP growth. Around 150+ companies across the value chain will be benefited, creating 70,000 to 1,00,000 direct and indirect jobs. A huge ECO System is being built which will continue to provide huge opportunities in years to come.
This investment and opportunity by Vedanta Group must also open the eyes of state governments that makes and announces BIG Statements on their Industrial policy but do nothing on the ground and realistically. The case of Tamilnadu deserves a comment here where CM Stalin has made some big targets for states’ Industrial investment. But the manner in which the state government treats business and industry is pathetic. The state continues to grapple between the two opposing polarity political parties – AIADMK and DMK. The missionary spread and tentacles in the state is highest in the country and CM Stalin has close relations with them. Thus the state is losing between Industrial development and political expediency.
The same thing was happening in Maharashtra when the MVA-led Thackeray government was in power. The State began to cater more towards the minority at the cost of Hindus and majority citizens. Political interference is one of the highest in the state of Maharashtra when it comes to Industries and businesses. No commercial activity can take place in the state without some political blessings.
This is what differentiates Gujarat from many of the states where people are more tuned toward business and politics is not as much prevalent as in other states.
The second observation is the Excellent Decision by the Vedanta group and its Chairman Anil Agrawal who has been not only a great industrialist but also a true nationalist and philanthropic who has risen from rags to riches. HIs decision to take such a BIG BET on the Semiconductor Industry in the country deserves all praise as other big industrial houses like Adani, Ambani, Tata, and the likes have stayed behind and not shown any interest. This risk-taking capacity coupled with scouting for opportunities and a zeal to make sure the implementation is successful has made the Vedanta group and its Chairman for what they are.
The advent of India into the Semiconductor space is delayed but still the lost ground can be covered with many global companies looking for alternatives to China over supply chain logistic issues. PM Modi and his team especially Ashvani Vaishnav has done a great job in this regard. That reminds us of someone predicting Ashvani Vaishnav is the dark horse in the days to come.
With our sincere best wishes to PM Modi and their team. Vedanta and its chairman Anil Agrawal, we hope that this case will also boost business over politics in other states and that India will continue to tread on the path of development. Incentives from states form a major FACTOR for companies in the final evaluation and decision. Few years back Amazon rejected Newyork and decided to make Washington DC / Virginia as its second headquarters in US which has given better incentives to the company.
Dr Asheesh Shah
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