BEIJING, July 11 (TMTPost)— Apple Inc.’s key supplier dealt a blow to Indian Prime Minister Narendra Modi ‘s “Make-In-India” push.

Credit：Visual China

Hon Hai Technology Group (Foxconn) said on Monday it decided not to proceed with a semiconductor venture with Vedanta Limited, an Indian multinational mining company, without elaborating on the reasons. “The joint effort for more than a year, which dedicated to realizing the common semiconductor idea in India, brought both Foxcoon and Vedanta fruitful cooperation experience and laid solid foundation for each party’s next move. Based on two parties’ agreement, Foxconn will not participated in operation of joint venture between two parties in order to explore more diversified development opportunities, “according to a statement late Monday.

The statement effectively announced withdrawal of one of Foxcoon’s biggest overseas projects. Volcan and Foxconn signed a pact last year to invest US$19.5 billion to build semiconductor and display production plants in Gujarat, a state along the western coast of India.

Vedanta has suggested Foxconn’s exit days before its partners’ announcement. In a statement last Friday, Vedanta said it would take over the ownership of a chipmaking venture with Foxconn and a display glass unit from its holding company Volcan Investments Ltd, and the deal is expected to complete the current quarter. A delay in state financing is the main hurdle of the Vedanta-Foxconn semiconductor venture, a Bloomberg report noted. The Indian government had asked the chip venture to reapply for incentives as the original plan to make 28 nanometer chips had changed. Reuters also cited sources that Foxconn pulled out of the venture is due to concerns about a delay in state incentives. It was said that New Delhi had raised several questions on the cost estimates in application for incentives.

Foxconn’s withdrawal was deemed as a punch in face of the Indian government, as the venture is supposed to be India’s first electronic chip manufacturing unit. The Indian government has recognized the importance of semiconductor and given the industry the top priority as it moved forward its “Make in India” initiative, launched in 2014. India has launched several initiatives to promote local semiconductor production, and the venture of Foxconn, as the world’s top contract electronics maker, was treated as a key step toward Modi’s ambitious local chipmaking dream.

Indian officials tried to play down affect of Foxconn’s exit. “This decision of Foxconn to withdraw from its joint venture with Vedanta has no impact on India’s Semiconductor Fab goals. None,” Rajeev Chandrasekhar, the Minister of State for Electronics and Information Technology tweeted.” Both Foxconn and Vedanta have significant investments in India and are valued investors who are creating jobs and growth.”

Chandrasekhar clarified the two companies could not source appropriate tech partners for their original proposal for 28 nm fab, and had recently submitted a 40 nm fab proposal backed by Tech licensing agreement from a major semiconductor player, which is now under the evaluation by the Tech Advisory group of India Semiconductor Mission, a state-backed agency. The minister signaled it doesn’t make any sense to blame the government for Foxconn’s exit as both the company and its partner can and would pursue their strategies in India independently. In the end of the tweet, Chandrasekhar refuted the report that called Foxconn’s decision a blow to New Delhi’s semiconductor ambition. “I can only say it’s a bad idea to bet against India under Prime Minister Modi,” Chandrasekhar said.

Ashwini Vaishnaw, Minister for Railways, Communications, Electronics & Information Technology, voiced confidence in Foxconn’s future development in India’s semiconductor sector. “Both the companies Foxconn and Vedanta are committed to India’s semiconductor mission and Make in India program,” Vaishnaw tweeted.