Have SEZ Norms Been Eased to Boost Semiconductor Manufacturing?
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Synopsis
The Indian government has significantly relaxed SEZ norms to encourage semiconductor manufacturing, allowing smaller plots for factories. This move aims to enhance domestic production amidst global supply chain challenges, creating opportunities for businesses to thrive.
Key Takeaways
- The government has eased SEZ norms to promote semiconductor manufacturing.
- Minimum land requirements for SEZ factories have been significantly reduced.
- Companies can now sell products in the domestic market and export.
- New regulations grant manufacturers more autonomy over their finished goods.
- Service providers can source materials from the domestic market.
New Delhi, June 5 (NationPress) The government has relaxed regulations to enhance the production of semiconductors and electronic components by permitting businesses to establish factories on smaller plots within special economic zones (SEZs), thereby reducing entry costs. These facilities will now be permitted to sell their products both in the domestic market and for export.
A recent gazette notification from the Ministry of Commerce and Industry reveals that the minimum land requirement for factories in SEZs dedicated to semiconductor or electronic component manufacturing has been decreased from 50 hectares to 10 hectares.
For multi-product SEZs, the minimum land requirement has also been reduced, now standing at four hectares instead of the previous 20 hectares. This new regulation will be applicable across several regions including Goa, Uttarakhand, Himachal Pradesh, Nagaland, Manipur, Mizoram, Arunachal Pradesh, Tripura, Meghalaya, Sikkim, Ladakh, Puducherry, Andaman and Nicobar Islands, Lakshadweep, Daman and Diu, and Dadra and Nagar Haveli.
The updated guidelines will benefit sectors such as semiconductors, display module sub-assemblies, various module sub-assemblies, printed circuit boards, lithium-ion battery cells, mobile and IT hardware components, hearables, and wearables. These modifications, part of the Special Economic Zones (Amendment) Rules, 2025, have been effective since June 3.
This initiative is a crucial element of the government's plan to elevate semiconductor and electronic product production in the wake of global trade uncertainties that threaten supply chains. The demand for chips in India has surged recently due to a significant increase in smartphone and electric vehicle manufacturing.
The Special Economic Zones (Amendment) Rules, 2025, introduced on June 3, also grant manufacturers greater autonomy to relocate or sell their finished goods.
According to the revised regulations, companies can now choose to export their products directly from India or sell them in the domestic market (domestic tariff area) by fulfilling the applicable tax obligations. They can also transfer goods to a free trade and warehousing zone within the same or a different SEZ or a customs bonded warehouse, which is a government-regulated storage facility. This amendment provides companies with increased flexibility in managing their inventories and improving profitability.
Additionally, service providers operating within SEZs are now allowed to procure raw materials, capital goods, components, and consumables from the domestic market, as well as through imports. This change simplifies operations since SEZ units must generate more foreign exchange from exports than they expend on imports.
Point of View
I firmly believe that the government's decision to ease SEZ norms reflects a progressive step towards strengthening India's semiconductor and electronic manufacturing sector. These reforms not only foster innovation but also position India as a key player in the global supply chain. The emphasis on domestic production is crucial as it will enhance self-reliance while navigating the complexities of international trade.
NationPress
08/06/2025
Frequently Asked Questions
What are the new SEZ norms for semiconductor manufacturing?
The government has reduced the minimum land requirement for semiconductor factories in SEZs from 50 hectares to 10 hectares, and for multi-product SEZs from 20 hectares to 4 hectares.
Can SEZ units sell products domestically?
Yes, under the new regulations, SEZ units are allowed to sell their products in the domestic market as well as for export.
When did the new SEZ norms come into effect?
The revised SEZ norms came into effect on June 3, 2025.
What sectors will benefit from the relaxed SEZ norms?
Sectors such as semiconductors, display modules, printed circuit boards, and IT hardware components will benefit from the relaxed SEZ norms.
How do the new rules impact inventory management for companies?
The new rules provide companies with greater flexibility in managing their inventories, allowing them to transfer goods to various zones and warehouses.
