India’s Vedanta experienced a 2% drop in its stock on Tuesday, following the announcement from Taiwan’s Foxconn that it has withdrawn from a $19.5 billion joint venture in semiconductors with the conglomerate. The partnership aimed to establish semiconductor and display production plants in Gujarat state, but concerns about delays in government approval for incentives led to Foxconn’s decision to pull out. This setback deals a blow to Indian Prime Minister Narendra Modi’s plans for chipmaking, which were deemed crucial for India’s economic strategy in the electronics manufacturing sector.
According to Reuters, Vedanta’s planned semiconductor business does not pose an immediate risk to its liquidity, as S&P Global Ratings stated. The credit rating agency also mentioned that no significant funding commitment has been made for the semiconductor project until government approval is obtained. Meanwhile, the Securities and Exchange Board of India (SEBI) slapped Vedanta with a 3 million rupee ($36,430.76) fine for violating disclosure requirements related to the Foxconn venture.
The news of Foxconn’s withdrawal has had a negative impact on Vedanta’s shares, causing them to drop by 2.6% to 275 rupees apiece. Since the partnership was initially announced in February of last year, the stock has already fallen by over 24%. This development underscores the challenges faced by Vedanta in the semiconductor sector.
The withdrawal of Foxconn from the joint venture is a significant setback for India’s ambitions in chipmaking, as the country seeks to establish itself as a major player in the electronics manufacturing industry. The government’s commitment to fostering a “new era” in this sector has now been put to the test.
In conclusion, the fallout from the Foxconn partnership has raised concerns about India’s ability to attract international investors and develop its semiconductor capabilities. The success of Prime Minister Modi’s chipmaking plans now hinges on addressing government approval delays and reassuring potential partners. Future developments in this sector will be closely watched by industry observers and investors alike.
(Reporting by Varun Vyas in Bengaluru; Editing by Dhanya Ann Thoppil and Sonia Cheema)
Image Source: The Star
($1 = 82.3480 Indian rupees)
Credit: The Star : Tech Feed
