India poised to deny funding for Vedanta-Foxconn chip venture

The Indian government is poised to deny crucial funding for Anil Agarwal's chip venture, Bloomberg News reported on Tuesday, a setback to the billionaire's ambition to build India's 'own Silicon Valley.'

The authorities are likely to inform the venture between Vedanta (VDAN.NS) and Taiwan's Foxconn (2317.TW) that it won't get incentives to make 28-nanometer chips, the report said, citing people familiar with the matter.

The venture's application seeking billions in government assistance hasn't met the criteria set by the government, the report said. The project is still in search of a technology partner and a manufacturing-grade technology license for the construction of 28nm chips, it added.

Foxconn declined to comment on the report, while India's technology ministry and Vedanta did not immediately respond to Reuters requests for comment.

The setback comes at a time when Agarwal's metals and mining conglomerate is already grappling with reducing its significant debt load.

Last year in September, Vedanta and Foxconn – formally called Hon Hai Precision Industry Co Ltd – announced they would invest $19.5 billion to set up semiconductor and display production plants in the state of Gujarat, creating more than 100,000 jobs.

"India's own Silicon Valley is a step closer now," Agarwal had said last year after the announcement.