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Inside Anil Agarwal's playbook to become the country's first chip maker

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14th May, 2022 15:03 IST
Anil AgarwalAnil Agarwal, chairman of the oil-to-metals Vedanta Group, has ambitions of setting a semiconductor chip plant in India, but says state governments need to look at creating a hub for electronics like Silicon Valley or what Taiwan has done.

Prime Minister Narendra Modi’s government late last year unveiled a $10 billion incentives plan, offering to cover as much as half of a project’s cost, to lure display and semiconductor fabricators to set up base in India.

The country has set itself the ambitious goal of emulating China and becoming the electronics factory of the world.

Agarwal said he is in talks with the government to avail of financial incentives for setting up a semiconductor plant. Vedanta has a partnership with Taiwan’s Foxconn.

Most of the world's chip output is limited to a few countries like Taiwan and United States. India, albeit a late entrant, is now actively luring companies, saying in December it wants to "usher in a new era in electronics manufacturing."

From $15 billion in 2020, Indian semiconductor market is estimated to reach $63 billion by 2026.

Chip plants generally consume electricity and water in huge quantities and their erratic supplies often concern industry in India.

As part of lobbying the states, Vedanta is demanding water and power at concessionary and fixed prices for a period of 20 years.

Vedanta, according to a Reuters report, is in talks to raise debt of $2.5 billion-$3 billion, out of a total planned outlay of $20 billion, to bolster its semiconductor and display manufacturing plans as it races to become the country's first chipmaker.

India needs to import $15 billion worth of semiconductors, said Agarwal.

“We have to also finalise a location to set up the plant. I am telling state governments that it is not enough to have a fab plant and that they should look at creating a hub for electronics like Silicon Valley or what Taiwan has done,” Agarwal told Business Standard in an interview.

According to Akarsh Hebbar, global managing director of Vedanta Group's display and semiconductor business, in a February interview to ET said the firm will target smartphones and electronics with the 28-nanometre (nm) fab and look at 70-80% domestic market, while the rest will be exported.

Metal and fossil fuel

The chairman of Vedanta said the world’s need for metals is insatiable. He also said “without oil and gas, nothing can happen”.

“Even today, if you go for renewable energy, whether you go for EV, eight times more metal is required.”

The Vedanta Group is looking to add glitter to its balance sheet by exploring for gold and copper at four blocks acquired by the listed parent company Vedanta while also increasing the production of silver this year at its subsidiary Hindustan Zinc.

For Gold, Vedanta has four mining blocks – three near Chandrapur in Maharashtra and one near Raipur in in Chhattisgarh. The company has received Stage 2 or final clearance from the Ministry of Environment, Forest and Climate Change for the Chhattisgarh block, Sunil Duggal, the chief executive of Vedanta told ET this week.

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