New Delhi - Foxconn's decision to pull out of a $19.5 billion chipmaking joint venture with Vedanta was reportedly driven by concerns over the Indian conglomerate's financial situation.

Sources familiar with the matter told Reuters that the Indian government also had concerns about Vedanta's finances, which led to the deal being scrapped.

Vedanta is a diversified mining and metals company with operations in India, Africa, and Australia. The company has been struggling with debt in recent years, and its shares have fallen by more than 50% in the past year.

Foxconn is a Taiwanese electronics manufacturing company that is a major supplier to Apple. The company was looking to expand its chipmaking operations in India, but it reportedly decided that Vedanta was not a reliable partner.

In a statement, Vedanta said that it was "disappointed" by Foxconn's decision, but that it understood the company's concerns. Vedanta said that it is "committed to its long-term growth and development," and that it will continue to invest in its chipmaking operations.

The collapse of the Vedanta-Foxconn deal is a setback for India's efforts to attract foreign investment in the chipmaking sector. The government has been trying to build a strong domestic chipmaking industry, but it has faced challenges in attracting the necessary investment.

The Vedanta-Foxconn deal was seen as a major step forward for India's chipmaking ambitions. However, the collapse of the deal is a reminder of the challenges that India still faces in attracting foreign investment in this sector.

Analyst's view

"The collapse of the Vedanta-Foxconn deal is a blow to India's chipmaking ambitions," said Arvind Singhal, chairman of consulting firm Technopak. "It shows that the Indian government still has a lot of work to do to attract foreign investment in this sector."

Singhal said that the Indian government needs to address the concerns of foreign investors, such as the high cost of doing business in India and the lack of skilled workers. He also said that the government needs to provide more incentives to attract foreign investment in the chipmaking sector.

"The Indian government needs to take urgent action if it wants to build a strong domestic chipmaking industry," Singhal said. "The collapse of the Vedanta-Foxconn deal is a wake-up call."