Government relaxes SEZ rules for semiconductor and electronics manufacturing

The government has revised land regulations for Special Economic Zones (SEZs) dedicated to semiconductor and electronic component manufacturing, reducing the required contiguous area from 50 hectares to 10. This initiative is intended to enhance domestic manufacturing of critical electronic components like display modules, batteries, and printed circuit boards.

The government has relaxed the contiguous land area requirements for Special Economic Zones (SEZs) dedicated solely to the manufacturing of semiconductors or electronic components, as per a recent notification. Previously, SEZs established for semiconductor or electronic component manufacturing were required to have a contiguous land area of 50 hectares. This requirement has now been reduced to 10 hectares.

The notification specifies that electronic components covered under this provision include display module sub-assemblies, camera module sub-assemblies, battery sub-assemblies, various other module sub-assemblies, printed circuit boards, Li-ion battery cells, mobile and IT hardware components, as well as hearables and wearables.

Additionally, the Board of Approval—the apex decision-making authority for SEZs—may waive the requirement for encumbrance-free land in cases where the property is mortgaged or leased to the central or state government or their authorised agencies.

Mr. Ashok Chandak, President, India Electronics and Semiconductor Association stated, “By liberalizing the policy and aligning it with the realities of land availability and global competitiveness, the government has reinforced India’s ambition to become a global electronics manufacturing destination.” 

Special Economic Zones (SEZs) are designated areas aimed at attracting both foreign and domestic investment to drive the country’s economic growth. Under the revised norms, manufacturers now have greater flexibility in managing their inventories. They can export products directly from India or sell them in the domestic market or Domestic Tariff Area (DTA) by paying applicable taxes. The updated rules have also provided relief to contract manufacturers. SEZs are now permitted to source raw materials, capital goods, components, and consumables not only through imports but also from the domestic market.