Government Eases SEZ Norms To Accelerate Semiconductor And Electronics Manufacturing

In a significant move to bolster India's high-tech manufacturing landscape, the government has introduced key amendments to the Special Economic Zones (SEZ) Rules, 2006, aimed at facilitating investment in semiconductor and electronic component production.

The reforms, notified by the Department of Commerce on 3 June 2025, are expected to catalyse growth in sectors marked by heavy capital requirements and long gestation periods.

Among the major changes is the reduction in the minimum land requirement for SEZs dedicated solely to semiconductors or electronic components.

The minimum contiguous land area has now been brought down from 50 hectares to just 10 hectares, under the amended Rule 5. This shift is expected to remove a significant entry barrier for high-technology players seeking to establish manufacturing hubs.

Further flexibility has been introduced through amendments to Rule 7, which now permits the Board of Approval to waive the mandatory encumbrance-free land condition, provided the land is mortgaged or leased to government agencies.

In a bid to support exports and improve foreign exchange metrics, changes to Rule 53 allow goods received or supplied on a free-of-cost basis to be included in Net Foreign Exchange (NFE) calculations, using standard customs valuation.

Additionally, Rule 18 has been amended to permit SEZ units in the semiconductor and electronics component sectors to supply products to the Domestic Tariff Area, subject to applicable duties.

Following these policy shifts, the Board of Approval has cleared proposals from Micron Semiconductor Technology India Pvt Ltd (MSTI) and Hubballi Durable Goods Cluster Private Ltd (Aequs Group).

Micron will establish a semiconductor manufacturing SEZ over 37.64 hectares in Sanand, Gujarat, with an investment of Rs 13,000 crore. Aequs will develop an electronics component SEZ in Dharwad, Karnataka, over 11.55 hectares, with an outlay of Rs 100 crore.

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