Rising Debt: A Reason Behind Foxconn's Withdrawal From Vedanta

Several rating agencies downgraded Vedanta Resources this year due to worries about a potential financial default.

Foxconn ended its joint venture with Vedanta to make chips because of worries from the Indian government and Foxconn regarding Vedanta's financial status, according to people with knowledge of the situation who spoke to Reuters.

Vedanta Resources, the London-based parent company of Indian multinational Vedanta, has struggled with a mounting debt load.

Statement from Vedantaa

Vedanta Resources responded to Reuters by saying that Vedanta, its Indian subsidiary, is in "a comfortable financial position" and that there is "no basis" for such rumours.

Attempts to reach the Indian IT ministry on Tuesday for comment were unsuccessful. Several rating agencies downgraded Vedanta Resources this year due to worries about a potential financial default. Vedanta Chairman Anil Agarwal said the group has not defaulted on debts.

Foxconn's plan in India

A day after terminating its joint venture with Vedanta to produce chips for $19.5 billion (approximately Rs. 1,60,600 crore), Foxconn announced on Tuesday that it intends to seek the benefits that India provides under its semiconductor manufacturing policy.

In a setback to Prime Minister Narendra Modi's plans for Indian chip manufacturing, Foxconn withdrew from its joint venture (JV) in the semiconductor industry with the metals-to-oil giant Vedanta on Monday.

"Foxconn is committed to India and sees the country successfully establishing a robust semiconductor manufacturing ecosystem," the company said.

"Foxconn is working towards submitting an application. This is not a negative," Foxconn said in a statement, as per NDTV.