Shares of Indian conglomerate Vedanta fell over 2% on Tuesday after Foxconn pulled out of their $19.5 billion semiconductor joint venture. The withdrawal deals a setback to India's ambitions to build a domestic chip industry.
Foxconn and Vedanta had partnered last year to set up semiconductor and display production plants in India. However, Foxconn decided to pull out of the venture due to delays in government approvals for incentives, according to a source.
The planned semiconductor business does not immediately increase liquidity pressure on Vedanta, according to S&P Global Ratings. But the withdrawal is a blow to Prime Minister Narendra Modi's semiconductor manufacturing plans aimed at propelling India's economic growth.
Market regulator SEBI had recently fined Vedanta 3 million rupees for disclosure violations related to the Foxconn venture.
Vedanta shares fell as much as 2.6% to 275 rupees on Tuesday, extending losses of over 24% since the venture was announced in February 2021.
