In a significant policy update notified on June 3, 2025, the Ministry of Commerce and Industry introduced sweeping amendments to the Special Economic Zones (Amendment) Rules, 2025 aimed at boosting semiconductor and electronics manufacturing in India.
At the heart of these reforms is a sharp reduction in land requirements for SEZs, exclusively semiconductor or electronic component. SEZs now require just 10 hectares, a steep drop from the earlier 50 hectares mandate. Similarly, in hilly regions and the Northeast including Sikkim, Nagaland, Himachal Pradesh, Puducherry, and others multi-product SEZs now need only 4 hectares, instead of the earlier 20 hectares.
Comparative Chart: SEZ Rules — Before vs. After
| Rule/Aspect | Old (Pre-June 2025) | New (Post-Amendment) |
|---|---|---|
| Land for dedicated chip/electronics SEZ | Minimum 50 hectares | Minimum 10 hectares |
| Land for multi-product SEZ (North/East/Hills) | Minimum 20 hectares | Minimum 4 hectares |
| Encumbrance-free land requirement | Must be entirely encumbrance-free | Permits mortgaged or leased (to Government agencies) land |
| Net Foreign Exchange (NFE) calculation | Free goods excluded | Free goods now included under customs valuation |
| Domestic Tariff Area (DTA) sales | Export only | DTA sales allowed post-duty payment |
| Inventory & logistics flexibility | Highly restricted | Options include FTWZ (Free Trade and Warehousing Zone), bonded warehouses, domestic procurement permitted |
Why the Changes Matter?
-
Lowering the Entry Barrier
By reducing minimum land requirements from 50 hectares to 10 hectares, the Government has enabled smaller firms and startups to enter advanced manufacturing a pivot that contrasts India’s previous favoring of large, capital-heavy setups. -
Easier Land Financing
Allowing encumbered (leased/mortgaged) land makes land acquisition faster and financing more accessible, especially in urban or semi-urban areas where clean, unencumbered land is scarce. -
Realistic NFE (Net Foreign Exchange) Accounting
Counting free-of-cost goods in NFE helps firms more accurately reflect inbound supply contributions vital in semiconductor value chains where capital equipment or tools may be provided by partners. -
Hybrid Supply Chain Model
Allowing DTA sales transforms SEZs into hybrid hubs, enabling domestic market access alongside export critical for component suppliers and niche fabs producing for both global and local demand. -
Operational Flexibility
Enabling movement of goods between SEZs, FTWZs, and bonded warehouses provides logistics agility, and lifting import-only restrictions unlocks faster sourcing of local components.
KEY BENEFITS
Key benefits of the 2025 amendment include:
- Smaller players can now enter chip manufacturing with only 10 hectares land.
- Government-leased land makes SEZ projects more feasible.
- Flexible supply chains improve local vendor integration.
- Faster logistics and hybrid market models (export + domestic sales).
Strategic Context & Broader Impact
These reforms build upon India’s ongoing ₹76,000 crore India Semiconductor Mission (2021) and electronics component PLI schemes. With an expected semiconductor market leap from ₹3.76 lakh crore (2023) to over ₹8.35 lakh crore by 2030, India is focused on building up the entire semiconductor process from chip design to assembly and testing, all the way to complete manufacturing plants.
Comparatively, India’s strategy aligns with global counterparts like the US’s CHIPS Act and EU incentives, focusing on resilience and reduced import reliance. Domestically, states like Uttar Pradesh are also driving the electronics agenda through targeted SEZs and electronics manufacturing clusters, further broadening regional supply ecosystems.
Summary
India’s June 2025 SEZ reforms for semiconductor and electronics manufacturing mark a paradigm shift lowering physical, financial, and regulatory hurdles, and transitioning SEZs from pure export zones into integrated, hybrid hubs. With initial approvals already flowing, these changes empower both global giants and nimble domestic players to scale manufacturing across India’s diverse regions. The next milestones will be actual execution, global investment traction, and ecosystem depth from chip design to packaging and beyond.
Disclaimer
The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. The content of this article is not intended to create and receipt of it does not constitute any relationship. Readers should not act upon this information without seeking professional legal counsel.
