Govt relaxes SEZ rules for semiconductor, electronics manufacturing

Government eases regulations for SEZs manufacturing semiconductors, allowing domestic supply, promoting investments in high-tech sectors.

The government has notified several changes to the regulations for the setting up of special economic zones (SEZs) for the manufacturing of semiconductors or electronic components, it announced on Monday (June 9, 2025). These revisions include reducing the minimum plot size for these units, and allowing such SEZ semiconductor units to also supply the rest of India, apart from only exporting.

Following the notification of these changes, the Ministry of Commerce and Industry said, approval has been granted for the setting up of two SEZ facilities in Gujarat and Karnataka with a total investment of ₹13,100 crore. 

“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,” the Ministry of Commerce and Industry said in a release.

The amendment to Rule 5 of the SEZ Rules, 2006, has meant that an SEZ set up exclusively for the manufacturing of semiconductors or electronic components will now need a minimum contiguous land area of 10 hectares, down from the earlier requirement of 50 hectares. 

The amendment to Rule 18 of the SEZ Rules further allows SEZ units in semiconductor as well as electronics component manufacturing sectors to also supply domestically to the rest of India after the payment of applicable duties. Conventionally, SEZs have been export-oriented.

Further, 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 authorized agencies.

These amendments were notified by the Department of Commerce on June 3, 2025. Following this, the Board of Approval for SEZs approved the proposals by Micron Semiconductor Technology India and Hubballi Durable Goods Cluster Private Ltd (part of the Aequs Group) for setting up SEZs for the manufacture of semiconductors and electronic components respectively.