Centre Relaxes SEZ Rules to Boost Semiconductor and Electronics Manufacturing

New Delhi – In a major step to accelerate semiconductor and electronic component production, the Indian government has eased regulations for setting up manufacturing units in Special Economic Zones (SEZs). The move is expected to reduce entry costs and give manufacturers greater market access.

According to a recent notification from the Ministry of Commerce and Industry, the minimum land requirement for semiconductor and electronic component factories within dedicated SEZs has been reduced from 50 hectares to just 10 hectares. For multi-product SEZs, the land requirement has been lowered from 20 hectares to 4 hectares in several states and union territories, including Goa, Uttarakhand, Himachal Pradesh, and those in the North East, as well as Puducherry, Ladakh, Andaman and Nicobar Islands, and others.

These revised norms, under the Special Economic Zones (Amendment) Rules, 2025, came into effect on June 3. They apply to a wide range of sectors, including:

• Semiconductors

• Display module sub-assemblies

• Printed circuit boards

• Lithium-ion battery cells

• Mobile and IT hardware components

• Hearables and wearables

A key change allows these units to sell their products in the domestic market, in addition to exporting them — a shift from earlier policies that focused primarily on exports.

The reforms are part of India’s broader strategy to strengthen its domestic electronics ecosystem amid global trade uncertainties and growing demand for chips, especially with the expansion of smartphone and electric vehicle manufacturing in the country.

The new rules also provide more operational flexibility. Manufacturers can:

• Export goods directly

• Sell in the Domestic Tariff Area (DTA) after paying applicable duties

• Transfer goods to a Free Trade and Warehousing Zone within or outside the SEZ

• Store products in a customs bonded warehouse

This flexibility helps companies better manage inventory and improve profitability.

Additionally, SEZ-based service providers are now allowed to procure raw materials, capital goods, components, and consumables from the domestic market, not just through imports. This will ease operations while still requiring SEZ units to maintain a positive net foreign exchange position.

With inputs from IANS