Foxconn seeks India's incentive regime despite Vedanta JV dilution

Foxconn, the world’s largest contract electronics manufacturer, signalled it would apply for Indian government incentives despite pulling out of a $19.5 billion semiconductor joint venture with Vedanta Group yesterday.

The Taiwanese company’s swift pivot highlights its determination to make India a manufacturing base and among prospective recipients of Modi’s largesse even without its previous domestic partners.

Foxconn’s original plans for a display and chipmaking facility with Vedanta were closely linked to Narendra Modi’s ambition to establish India as a global electronics hub. The “Make in India” programme provides subsidies for foreign tech companies to spur the local production Modi sees as crucial to creating jobs.

Though ending their accord to invest billions in Vedanta’s home state of Gujarat may slow Foxconn’s pace, India is too big a prize to surrender. In a statement, Foxconn said it “has no intention to do anything but continue to strongly support” Modi’s policy goals and “establish a diversity of local partnerships”.

Building fabs “from scratch in a new geography is a challenge, but Foxconn is committed to invest in India,” the company said. “We have been working on challenges like this since the 1980s.”

Foxconn counts Apple, HP, Dell and BlackBerry among its clients, but a long-delayed India expansion would boost its diversification into markets beyond China. The company is determined to capture opportunities in India’s fast-growing electronics sector, though questions remain over how it will proceed without its mining partner.

Foxconn gave no details on alternative manufacturing or alliance plans in India. But with various state governments competing to draw tech investment, Modi’s federal incentives and India’s massive scale, Foxconn is unlikely to delay for long.

Semiconductor industry analysts view India’s current policy framework as inadequate to relocate high-tech supply chains en masse from China or lure Apple’s iPhone production in the near term. But for Foxconn, dominating even a small fraction of India’s domestic market or forging a new strategic beachhead may warrant the risks of first-mover advantage.

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