Govt Notifies SEZ Reforms to Boost Semiconductor and Electronics Component Manufacturing

The Government of India has introduced significant reforms in Special Economic Zones (SEZ) rules to cater to the specialized needs of the semiconductor and electronics component manufacturing sectors. These amendments were notified by the Department of Commerce on June 3, 2025.

• Reduced Minimum Land Area (Amendment to Rule 5):
  • An SEZ exclusively for semiconductor or electronic component manufacturing now requires a minimum contiguous land area of only 10 hectares.
  • This is a significant reduction from the previous requirement of 50 hectares.
• Relaxation for Encumbrance-Free Land (Amendment to Rule 7):
  • The Board of Approval for SEZs can now relax the condition requiring SEZ land to be encumbrance-free.
  • This applies in cases where the land is mortgaged or leased to the Central Government, State Government, or their authorized agencies.
• Inclusion of Free-of-Cost Goods in NFE (Amendment to Rule 53):
  • The value of goods received and supplied on a free-of-cost basis can now be included in Net Foreign Exchange (NFE) calculations.
  • These will be assessed using applicable customs valuation rules.
• Permission for Domestic Supply (Amendment to Rule 18):
  • SEZ units in the semiconductor and electronics component manufacturing sectors are now permitted to supply goods domestically into the Domestic Tariff Area (DTA).
  • This is allowed after payment of applicable duties.

Anticipated Impact:

• Boosts high-tech manufacturing in India.
• Spurs growth of the semiconductor manufacturing ecosystem.
• Creates high-skilled jobs within the country.