India's Vedanta in talks to raise up to US$3b debt in semiconductor push

India's Vedanta in talks to raise up to US$3b debt in semiconductor push
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BENGALURU (April 30): India's Vedanta is in talks with banks to raise debt of US$2.5 billion to US$3 billion (about RM13.06 billion) to bolster its semiconductor and display manufacturing plans as it races to become the country's first chipmaker, a top company official told Reuters on Saturday (April 30).

The oil-to-metals conglomerate decided in February to diversify into chip manufacturing and form a joint venture with Taiwan's Foxconn. It has a total planned investment outlay of US$20 billion.

Vedanta is seeking incentives from Prime Minister Narendra Modi's federal government and is also in talks with several Indian states. After getting subsidies, and once its definitive agreements are in place, the company plans to raise bank debt of US$2.5 billion to US$3 billion.

"We have financial banking relationships across India. We are talking to them," said Akarsh Hebbar, Vedanta's global managing director of display and semiconductor business.

Vedanta is seeking incentives such as 1,000 acres (405 hectares) of free land, and cheaper water and power from state governments as part of its foray into semiconductors and displays, Reuters exclusively reported on Thursday.

Speaking during an interview on the sidelines of India's first semiconductor conference, being held in the tech hub of Bengaluru, Hebbar said the company is expecting a return on investment of 10% to 15% over 15 to 20 years.

"Break-even may happen somewhere in the middle, and we will start getting profits slowly after that," he added.

On Friday, Modi and his information technology ministers outlined plans for more investment incentives, telling the conference they want India to emerge as a key player in the global chip market, now dominated by manufacturers in Taiwan and a few other countries.