Last year Foxconn and Vedanta signed a pact last year to set up semiconductor and display production plants in Modi's home state of Gujarat.

The two companies worked together for more than a year to bring "a great semiconductor idea to reality, but they had mutually decided to end the joint venture and it will remove its name from an entity that is now fully owned by Vedanta.

Modi has made chipmaking a top priority for India's economic strategy in pursuit of a "new era" in electronics manufacturing and Foxconn's move represents a blow to his ambitions of luring foreign investors to make chips locally for the first time.