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Context:
The Union government has notified several changes to the regulations for the setting up of special economic zones (SEZs) for the manufacturing of semiconductors or electronic parts. Revisions include reducing minimum plot size for the units and allowing such semiconductor units to also supply to the rest of India, apart from exporting.
Key Amendments to SEZ Rules, 2006
- Rule 5 (Minimum Land Area Requirement)
- Previous requirement: 50 hectares
- Revised requirement: 10 hectares (for SEZs in semiconductors and electronic component manufacturing)
- Rule 18 (Domestic Supply Allowed)
- Change: SEZ units in semiconductors and electronics can now supply products within India (i.e., Domestic Tariff Area) after paying applicable duties
- Earlier: Only export-oriented operations were permitted
- Rule 7 (Encumbrance Relaxation)
- Change: The Board of Approval may now relax the “encumbrance-free land” requirement
- Applies where land is mortgaged or leased to government or authorized agencies
Objective of the Amendments
- Promote pioneering, high-tech investments
- Address capital intensity and long gestation challenges in semiconductor manufacturing
- Build India’s semiconductor ecosystem and reduce import dependency
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New SEZ Approvals:
- Micron Semiconductor Technology India
- Location: Sanand, Gujarat
- Purpose: Semiconductor manufacturing SEZ
- Hubballi Durable Goods Cluster Pvt Ltd (Aequs Group)
- Location: Dharwad, Karnataka
- Purpose: Electronic components SEZ
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