Vedanta need to submit the application for financial assistance in order to manufacture 40nm chips and provide an updated estimate for capital expenditure
The Indian government has decided to accept new applications to build Semiconductor Fabs and Display Fabs in the country, starting from June 1, 2023, through the Modified Semicon India Programme. The responsible authority for implementing this program is the India Semiconductor Mission, the designated nodal agency. Its main objective is to develop a semiconductor and display manufacturing ecosystem within India.
Under the Modified Programme, companies, consortia, and joint ventures are eligible for a fiscal incentive of 50% of the project cost for setting up Semiconductor Fabs in India, regardless of the node (including mature nodes). Additionally, a fiscal incentive of 50% of the project cost is available for setting up Display Fabs with specified technologies in India.
The application window for the “Modified Scheme for setting up of Compound Semiconductors/Silicon Photonics/Sensors Fab/Discrete Semiconductors Fab and Semiconductor ATMP/OSAT facilities in India” will remain open until December 2024. Similarly, the application window for the Design Linked Incentive Scheme will also be open until December 2024. As of now, 26 applications have been received under the DLI Scheme, and five applications have been approved.
In December 2021, the government launched the Semicon India Programme with a budget of INR 76,000 crore to foster the development of a semiconductor and display manufacturing ecosystem in India. All applicants who previously applied under the earlier schemes for setting up Semiconductor Fabs and Display Fabs are allowed to submit their applications under the Modified Scheme, provided they make suitable modifications to their proposals.
What about Vedanta?
The government will require Vedanta to submit a new application for financial assistance in order to manufacture 40nm chips and provide an updated estimate for capital expenditure. Previously, the company led by Anil Agarwal had presented a capital expenditure estimate of $10 billion to the Indian government.
Currently, Vedanta is actively working towards reducing its gross borrowings, which stood at $6.8 billion as of April. Obtaining financial support is crucial for the company at this stage. While previous reports from Bloomberg News indicated that Vedanta has been in discussions with STMicroelectronics NV regarding licensing chip fabrication technology, the company has not yet publicly disclosed its partnering entity.
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