India eases SEZ rules to boost semiconductor, electronics component manufacturing
New Delhi: The central government has introduced pioneering reforms in the Special Economic Zones (SEZ) rules to address the specialised needs of semiconductor and electronics component manufacturing sectors.
Since manufacturing in these sectors is highly capital-intensive, import-dependent and involves longer gestation periods before turning profitable, rule amendments have been carried out to promote pioneering investments and boost manufacturing in these high-technology sectors.
After amendments in Rule 5 of SEZ Rules, 2006, an SEZ set up exclusively for the manufacturing of semiconductors or electronic components will require a minimum contiguous land area of only 10 hectares, reduced from the earlier requirement of 50 hectares.
Further, an amendment to Rule 7 of SEZ Rules, 2006, allows the Board of Approval for SEZs to relax the condition requiring SEZ land to be encumbrance-free in cases where it is mortgaged or leased to the Central or State Government or their authorised agencies.
The amended Rule 53 will allow the value of goods received and supplied on a free-of-cost basis to be included in Net Foreign Exchange (NFE) calculations and assessed using applicable customs valuation rules.
Moreover, amendments have been made in Rule 18 of the SEZ Rules to allow SEZ units in the semiconductor as well as electronics component manufacturing sector to also supply domestically into the Domestic Tariff area after payment of applicable duties.
The amendments will boost high-tech manufacturing in the country, spur growth of the semiconductor manufacturing ecosystem and create high-skilled jobs in the country.
These amendments were notified by the Department of Commerce on June 3, 2025.
Subsequently, the Board of Approval for SEZs has accorded approval to the proposals received from Micron Semiconductor Technology India Pvt Ltd (MSTI) and Hubballi Durable Goods Cluster Private Ltd (Aequs Group) for the setting up of SEZs for the manufacturing of semiconductors and electronic components, respectively.
Micron will establish its SEZ facility in Sanand, Gujarat, spanning an area of 37.64 Hectares with an estimated investment of Rs. 13,000 crores. Meanwhile, Aequs will establish its SEZ in Dharwad, Karnataka, covering an area of 11.55 Hectares to manufacture electronics components, with an estimated investment of Rs. 100 crores.
The semiconductor industry in India is still in a nascent stage, with various local and multinational companies intending to tap its vast potential. Chip shortages during Covid realised the importance of indigenous manufacturing to fill the deficiency, for national security and to galvanise indigenous innovation.
Five semiconductors are under construction in Gujarat and Assam.
In May 2025, the Union Cabinet approved a semiconductor manufacturing unit in Jewar, Uttar Pradesh, India's sixth. It will be a joint venture of HCL and Foxconn, to be set up near the Jewar airport. Production will start from 2027.
The works on other five units are currently underway, and of them is expected to be inaugurated later this year, Union Minister Ashwini Vaishnaw told reporters in May.
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