In a major policy push to catalyse high-tech manufacturing in India, the Central Government has introduced path-breaking reforms in the Special Economic Zones (SEZ) Rules, targeting the semiconductor and electronics component sectors. The move aims to ease regulatory constraints for these capital-intensive industries, which are often import-dependent and face longer gestation periods before turning profitable.
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Under the revised SEZ Rules notified by the Department of Commerce on June 3, 2025, the minimum contiguous land area requirement for setting up SEZs exclusively for semiconductor or electronic component manufacturing has been reduced from 50 hectares to just 10 hectares by amending Rule 5 of the SEZ Rules, 2006. This is expected to significantly lower entry barriers for investors.
Further, amendments to Rule 7 now allow the Board of Approval (BoA) to relax the condition that SEZ land must be encumbrance-free if the land is mortgaged or leased to the Central or State Government or their authorised agencies. This provides greater flexibility in land acquisition and utilisation for SEZ developers.
To further enhance ease of doing business, Rule 53 has been amended to permit goods received or supplied on a free-of-cost basis to be included in Net Foreign Exchange (NFE) calculations, using customs valuation norms. Additionally, amendments in Rule 18 will now allow SEZ units in the semiconductor and electronics component sectors to sell their products in the domestic tariff area (DTA) after paying the applicable duties.
These liberalised norms are expected to drive large-scale investments, foster a robust semiconductor ecosystem, and create high-skilled employment across the country.
Following these regulatory changes, the Board of Approval has greenlit two major SEZ proposals. Micron Semiconductor Technology India Pvt Ltd (MSTI) will establish a semiconductor manufacturing SEZ in Sanand, Gujarat over 37.64 hectares with an estimated investment of Rs. 13,000 crore. Meanwhile, Aequs Group’s Hubballi Durable Goods Cluster Private Ltd has received approval to set up an electronics component SEZ over 11.55 hectares in Dharwad, Karnataka with an investment of Rs. 100 crore.
These projects mark a significant step toward India’s goal of becoming a global hub for electronics and semiconductor manufacturing.
Special Economic Zones
Special Economic Zones (SEZs) are specially designated areas within a country that offer businesses tax incentives, simplified customs procedures, and regulatory benefits to promote export-oriented industrial growth. In India, SEZs play a vital role in attracting foreign investment, boosting manufacturing, and generating employment.
