Government Relaxes SEZ Norms for Electronics and Semiconductor Units

The government has amended the Special Economic Zones (SEZ) rules to lower the minimum land requirement for manufacturing units focused on semiconductors and electronic components. Earlier, such SEZs needed a contiguous area of 50 hectares. The new rule allows these units to be set up on just 10 hectares of land. 

For multi-product SEZs in certain regions like Sikkim, Ladakh, and Puducherry, the requirement has been reduced from 20 hectares to 4 hectares.

Encumbrance-Free Clause Modified

Until now, SEZ land had to be completely free of encumbrances. The latest changes allow land that is mortgaged or leased to the central or state government, or their authorised agencies, to be used for SEZ development. This helps broaden the range of eligible land parcels.

List of Recognised Components

As per news reports, the rules now include a list of items under the electronics category. These include display and camera module sub-assemblies, battery packs, lithium-ion cells, printed circuit boards, mobile and IT hardware, smartwatches, earbuds, and other electronic modules.

Changes to Processes

SEZ-based manufacturers now have more flexibility in how they handle finished goods. Products can be exported directly, sold in the domestic market after paying applicable taxes, or shifted to Free Trade Warehousing Zones or bonded warehouses, either in the same or a different SEZ.

Procurement Flexibility 

Contract manufacturers operating in SEZs can now procure raw materials, capital goods, and consumables from the domestic market, not just through imports. They are also required to include free-of-cost supplies when calculating their foreign exchange earnings, as SEZ rules mandate net positive foreign exchange.

Background

India launched the India Semiconductor Mission in 2021 with a budget of ₹76,000 crore. A separate Production-Linked Incentive (PLI) scheme worth ₹22,919 crore was introduced in March 2025 for electronics components. India’s semiconductor market stood at $45 billion in 2023 and is estimated to cross $100 billion by 2030.

Read more: Best Semiconductor Stocks in June 2025!

Conclusion

The changes simplify land and operational requirements for setting up semiconductor and electronics units under the SEZ framework.

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