In a setback to Prime Minister Narendra Modi’s semiconductor ambitions for India, Foxconn has announced its withdrawal from a $19.5 billion joint venture with Indian conglomerate Vedanta, reported Reuters, citing a statement from the Taiwanese company on Monday.

The world’s largest contract electronics maker had signed an agreement with Vedanta last year to establish semiconductor and display manufacturing facilities in Gujarat, Modi’s home state.

In a statement, Foxconn (2354.TW) said, “Foxconn has determined it will not move forward on the joint venture with Vedanta,” without providing specific reasons for the decision. The company noted that after working with Vedanta for over a year to realize “a great semiconductor idea,” they mutually agreed to terminate the venture, and Foxconn will henceforth remove its name from the entity, now fully owned by Vedanta.

However, Vedanta reaffirmed its commitment to its semiconductor project, stating it had “lined up other partners to set up India’s first foundry.” The company has, according to its statement, “redoubled its efforts” to fulfil Modi’s vision. A source familiar with the situation mentioned that concerns about delays in incentive approval by the Indian government contributed to Foxconn’s decision to exit the venture. The government also raised several questions regarding the cost estimates provided to request incentives.

Deputy IT Minister Rajeev Chandrasekhar, responding to Foxconn’s decision, stated it had “no impact” on India’s plans and added that both companies remained “valued investors” in the country. He emphasized that it was not the government’s place to intervene in the partnership decisions of two private companies.

  Foxconn, India, Narendra Modi, Rajeev Chandrasekhar, Vedanta