SEZ Amendment Rules 2025: Targeted and swifter approach

Hindustan Times

5 days ago

The recent Special Economic Zones (Amendment) Rules, 2025 (notified by the ministry of commerce and industry on June 3, 2025) introduces targeted relaxations and operational reforms, with the objective to address the specialised needs of semiconductor and electronics component manufacturing sectors. Amendment (Representative file photo)
Due to its functionality in modern equipment, it is expected that the semiconductor industry shall increase investment in semiconductor and electronic parts manufacturing. In 2021, the Indian Government introduced the $10 billion Semicon India Programme to strengthen the domestic manufacturing of semiconductors, supporting display fabrication and building a comprehensive semiconductor ecosystem. Thus, certain ease of norms has been extended specially to promote this critical sector by virtue of amendments to the SEZ Rules via the 2025 Amendment Rules.
The key amendments are:
Reduced land requirement for semiconductor SEZs--The amendment introduces a sector-specific relaxation by reducing the minimum land requirement for SEZ exclusively set up for the manufacturing of semiconductors or electronic components to 10 hectares. This is a pivotal change from the earlier blanket requirement of 50 hectares for manufacturing SEZ or 25 hectares in some states. The accompanying explanation further broadens the scope to include a wide array of electric components which are – 'display module sub-assembly, camera module sub-assembly, battery sub-assembly, various types of other module sub-assemblies, printed circuit board, li-ion cells for batteries, mobile and information technology hardware components, hearables and wearables.'
This measure will facilitate the participation from smaller players and regional investors
Net Foreign Exchange (NFE) computation for semiconductor units and developers. The amended rules allow the value of goods received and supplied on a FOC basis to be included in NFE calculations for units providing manufacturing services. This becomes a facilitative change given that, in the semiconductor manufacturing sector, typically components are imported by overseas clients and the SEZ unit is paid only for the processing or assembly services.
Relaxation on encumbrance-free land. The strict bar against encumbrances for declaration of an area to SEZ has been relaxed. Such bar would now not apply to in instances where the land is mortgaged to or leased by the central or state government, or the respective agencies.
Table
Reduction in minimum land requirement for textile SEZs in Gujarat. The amendment to replaces the minimum area requirement for the textiles and articles of textiles sector in Gujarat from 20 hectares to 4 hectares.
The SEZ Amendment Rules 2025 are poised to benefit a broad range of companies operating in the semiconductor and electronics manufacturing sectors, as well as textile enterprises in Gujarat. The new rules specifically relax land requirements and offer greater operational flexibility, making it easier for manufacturers and supply chain participants in these sectors to establish and expand SEZ units. Companies engaged in the production and assembly of semiconductors, display modules, battery assemblies, printed circuit boards, IT hardware, and related components are among those that stand to gain from these regulatory changes. The amendment aligns with the government's strategic drive to position India as a global manufacturing hub, reduce dependency on imports, and integrate more deeply into global value chains
The government has publicly identified two companies as direct beneficiaries through SEZ approvals under the amended rules:
Micron Semiconductor Technology India Pvt Ltd (MSTI): Approved to set up a 37.64-hectare semiconductor SEZ in Sanand, Gujarat, with an investment of ₹ 13,000 crore.
13,000 crore. Hubballi Durable Goods Cluster Pvt Ltd (Aequs Group): Approved for an 11.55-hectare electronics components SEZ in Dharwad, Karnataka, with an investment of
₹ 100 crore.
These approvals underscore the immediate impact of the amendments in facilitating high-capital, large-scale investments by prominent industry players.
The 2025 Amendment introduces commercially relevant reforms to the SEZ framework, particularly targeting the semiconductor and electronics sectors, with an emphasis on flexibility in land norms, cross-border manufacturing models, and NFE calculations. The changes aim towards reduction of entry barriers and enable more sophisticated structuring of supply and distribution arrangements.
The government's decision to proceed with targeted amendments to the SEZ Rules in 2025, while a comprehensive DESH Bill or a complete overhaul of the SEZ Act remains pending, reflects an inclination toward agile regulatory intervention, while a broader legislative reform is pending. The amendments are designed to address immediate operational challenges, especially those faced by the semiconductor and electronics industries—by enabling greater flexibility, reducing entry barriers (such as land requirements), and streamlining SEZ operations. This approach allows for swifter and more tailored solutions to sector-specific needs, rather than waiting for the protracted process associated with passing new legislation or implementing a wholesale restructuring of the existing law.
This article is authored by Stella Joseph, partner and Aradhya Singh, advocate, Economic Laws Practice.