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India's Vedanta is in talks with banks to raise debt of $2.5-$3 billion to bolster its semiconductor and display manufacturing plans, as it races to become the country's first chipmaker, a top company official told Reuters on Saturday.

The oil-to-metals conglomerate decided in February to diversify into chip manufacturing and formed a joint venture with Taiwan's Foxconn. It has a total planned investment outlay of $20 billion.

Vedanta is seeking incentives from Prime Minister Narendra Modi's federal government and is also in talks with several Indian states. After getting subsidies, and once its definitive agreements are in place, the company plans to raise bank debt of $2.5 to $3 billion.

"We have financial banking relationships across India. We are talking to them," said Akarsh Hebbar, Vedanta's Global Managing Director of Display and Semiconductor Business.

Vedanta is seeking incentives such as 1,000 acres (405 hectares) of free land, and cheaper water and power from state governments as part of its foray into semiconductors and displays, Reuters exclusively reported on Thursday.

Speaking during an interview on the sidelines of India's first semiconductor conference, being held in the tech hub of Bengaluru, Hebbar said the company was expecting a return on investment of 10-15% over 15-20 years.

"Breakeven may happen somewhere in the middle, and we will start getting profits slowly after that," he said.

On Friday, Modi and his IT ministers outlined plans for more investment incentives, telling the conference they wanted India to emerge as a key player in the global chips market, now dominated by manufacturers in Taiwan and a few other countries.