The Business Bytes
THEBUSINESSBYTES BUREAU
NEW DELHI, JUNE 9, 2025
In a major policy boost to India’s high-tech manufacturing ambitions, the Government of India has notified transformative reforms in the Special Economic Zones (SEZ) Rules, aimed at catalyzing investment in the semiconductor and electronics component manufacturing sectors. These strategic amendments are poised to fast-track India’s emergence as a global hub for next-generation electronics and chipmaking.
The Department of Commerce, through amendments to the SEZ Rules, 2006, has addressed long-standing structural challenges facing these capital-intensive and import-dependent sectors. By recognizing the need for policy agility in industries with extended gestation periods and heavy technological investment, the reforms are designed to enable smoother project execution and enhance global investor confidence.
A major change includes the amendment of Rule 5, which reduces the minimum contiguous land requirement for SEZs dedicated to semiconductor and electronic component manufacturing from 50 hectares to just 10 hectares. This move significantly lowers entry barriers and aligns with the spatial needs of these specialized manufacturing units.
In another significant relaxation, Rule 7 has been amended to allow the Board of Approval (BoA) to waive the requirement of “encumbrance-free” land in cases where the property is mortgaged or leased to government entities or their authorized agencies, ensuring faster approvals without compromising on governance.
Further, amendments to Rule 53 now permit goods received or supplied on a free-of-cost basis to be included in Net Foreign Exchange (NFE) calculations — an important measure that aligns valuation protocols with practical trade realities. Additionally, Rule 18 has been amended to allow SEZ units in these sectors to sell products into the domestic tariff area (DTA) after payment of applicable duties, expanding market access and operational flexibility.
These reforms are expected to unlock new investment flows, create high-skilled employment, and accelerate the development of India’s semiconductor ecosystem.
Soon after the notification was issued on June 3, 2025, the BoA gave its nod to two marquee projects under the revised norms. Micron Semiconductor Technology India Pvt. Ltd. (MSTI) has been approved to set up a 37.64-hectare SEZ in Sanand, Gujarat, with an investment of ₹13,000 crore, marking one of India’s most significant semiconductor projects. Similarly, Hubballi Durable Goods Cluster Pvt. Ltd., part of the Aequs Group, will establish an SEZ in Dharwad, Karnataka, spanning 11.55 hectares for electronics component manufacturing, with a projected investment of ₹100 crore.
