A recent report by Counterpoint Research and the India Electronics & Semiconductor Association says the Indian semiconductor market to be worth $64 billion by 2026; in 2019, that figure stood at $22.7 billion.
Another report by Deloitte is almost as bullish, and pegs the market at $55 billion in three years. Three industries are expected to account for more than 60 percent of that market: Smartphones and wearables, automotive components, and computing and data storage. What is more, semiconductor and chip technology will be in high demand between 2025 and 2028; that’s when private deployment 5G networks are expected to take off.
The government is enabling this push by pitching in with half of the new project costs via incentives; that’s excluding outlays for research and development, skill development and training. In end-December, it had earmarked $10 billion as an incentive to companies keen on the semiconductor sector. Five applications—three for chips and two for display—were received till February. Plus, the ongoing production-linked, and design-linked incentive schemes are expected to do their bit.
One industrialist keen to play for big stakes on this front is Anil Agarwal, the chairman of Vedanta Resources. “The future in India now is only for two or three things,” Agarwal tells Manu Balachandran, who has written the cover story on Agarwal’s gambit. “Seventy percent of our imports are between natural resources and electronics. For electronics, the basic raw materials are chips and glass.”
Agarwal has blueprinted a ₹1.54 lakh crore game plan to become India’s first chips and glass display maker. Half of that investment is expected from the central government’s subsidy (to both projects).
It’s an ambitious project. After all, setting up a semiconductor fab is a complex exercise that can be completed within three years. But that’s in the few countries where an ecosystem of suppliers has been developed. To that extent, Agarwal is entering uncharted waters. As is the government, which is taking its time to clear proposals. Agarwal, though, is determined to go the whole hog. “We are going ahead,” says Agarwal. “Land has been allotted [in Gujarat] and the partnership with Foxconn has been tied up.” He has created two subsidiaries, one for semiconductors in a joint venture with Foxconn, and the other to make display panels for application in television sets, smartphones, PCs and automobiles.
Agarwal reckons Vedanta’s applications are on the last mile. Yet, the chances of competition increasing are high. Last fortnight, Bloomberg News reported that the government was planning to reopen the application process for the $10 billion incentive; this time the report said that the 45-day requirement to submit applications could be done away with, paving the way for more proposals.
Another worry for Vedanta could be its mounting debt and repayment obligations when it is embarking on such a huge investment. Agarwal, though, doesn’t seem perturbed. “If you look at the overall number [$13 billion, equally between Vedanta Ltd and Vedanta Resources], we have one of the best balance sheets in the world,” Agarwal tells Balachandran in an exclusive free-wheeling interview.
This issue is special because it marks the 14th anniversary of Forbes India, and it is only fitting that we packed it with exclusive coverage of Vedanta’s semiconductor gambit, complemented with an Agarwal interview. We will continue our celebrations with another very special issue next fortnight. Look out for it.
(This story appears in the 02 June, 2023 issue of Forbes India. To visit our Archives, click here.)