The central government on Monday notified key amendments to the Special Economic Zones (SEZ) Rules, 2006, to ease the establishment of semiconductor and electronics component manufacturing units. The reforms, which were notified by the Department of Commerce on June 3, are expected to address the sector’s capital-intensive nature and long gestation periods, while reducing import dependency and enabling domestic value addition.
One of the major changes includes the reduction in the minimum land requirement for SEZs dedicated exclusively to semiconductor or electronics component manufacturing. The threshold has been brought down from 50 hectares to 10 hectares through an amendment to Rule 5, significantly lowering the entry barrier for firms in this strategic sector. The Centre has also amended Rule 7 to permit the Board of Approval to relax the requirement of encumbrance-free land in cases where the land is mortgaged or leased to Central or State governments or their authorised agencies.
Further easing compliance norms, the government has amended Rule 53 to allow goods received or supplied on a free-of-cost basis to be included in the Net Foreign Exchange (NFE) calculations. The valuation of such goods will follow the existing customs valuation rules. Additionally, a crucial change to Rule 18 enables SEZ units in the semiconductor and electronics component manufacturing sectors to sell products in the domestic tariff area (DTA) after paying the applicable duties. This is expected to enhance the flexibility and commercial viability of operations for SEZ units.
Following the notification, the Board of Approval has cleared two significant proposals under the new regime. Micron Semiconductor Technology India Pvt. Ltd. (MSTI) has received the green light to set up a dedicated SEZ in Sanand, Gujarat, over 37.64 hectares. The facility is expected to attract investments to the tune of ₹13,000 crore and will focus on semiconductor manufacturing.
Similarly, Hubballi Durable Goods Cluster Pvt. Ltd., part of the Aequs Group, has secured approval for setting up an SEZ for electronics components manufacturing in Dharwad, Karnataka. The proposed unit will span 11.55 hectares and entail an investment of ₹100 crore.