India Eases SEZ Norms to Boost Semiconductor & Electronics Manufacturing

In a strategic move to accelerate domestic semiconductor and electronics manufacturing, the Indian Ministry of Commerce and Industry has amended Special Economic Zone (SEZ) rules. The hallmark change is a reduction in the minimum contiguous land requirement, slashed from 50 hectares to just 10 hectares for SEZs exclusively focused on semiconductor and electronics production.

Representational image File picture | The Telegraph

This change reflects India’s broader ambition: to transform from an electronics importer to a semiconductor powerhouse, strengthen supply chain resilience, and seize a significant share of the $400 billion global electronics market projected by 2025.

Key Benefits of the SEZ Norm Revision

1. Lower Land Entry Barrier

• Smaller land parcels allow startups and smaller investors faster and cost-effective access.

• Reduces dependency on large, government-allocated land, making operations more flexible and responsive.

2. Attracting Investments & FDI

• Facilitates foreign direct investment by simplifying land acquisition.

• Builds on progressive policies like 100% automatic FDI in electronics systems and design manufacturing.

3. Boosting Local Chip Ecosystem

• Supports India’s goal of cultivating a full semiconductor value chain—from design to manufacturing, packaging, and testing.

• Aligns with flagship initiatives such as Make in India, Digital India, and schemes like M-SIPS and SPECS.

Broader Context: Growth & Policy Landscape

Previous Hurdles

• Historically, 65–70% of semiconductor demand has been met through imports due to limited local fabs and red tape.

• Skill and infrastructure gaps hinder competitiveness in chip manufacturing .

Government Initiatives

• National Policy on Electronics (2011) offered incentives like capital subsidies, tax breaks, and development of Electronic Manufacturing Clusters (EMCs).

• In 2024–25, India’s Union Budget dedicated ₹13,104.5 crore to chip and electronics manufacturing.

• Semicon India Programme led to approvals of four new semiconductor units and nine electronics components projects—projecting around 15,710 new jobs.

Strategic Investments

• Micron Technologies began constructing a fab in Gujarat in September 2023.

• Increased investment in OSAT (Outsourced Semiconductor Assembly & Test) facilities, including collaborations with HCL-Tech/Foxconn and Kaynes Technology.

• SunEdison-Adani MoU for a ₹4,000 cr solar PV fab underscored diversified electronics investment.

Conclusion

The relaxation of SEZ rules marks a pivotal moment in India’s semiconductor and electronics journey. By enabling smaller, sector-focused zones, the government is removing key entry barriers and inviting broader participation—from startups to global firms. Complemented by robust financial incentives, infrastructure support, and strategic investments, this initiative positions India to evolve from a dependence on imports to a self-reliant manufacturing powerhouse. Through holistic policy integration—ranging from land reforms to fiscal stimuli and international partnerships—India is cementing its foothold in the global semiconductor landscape.

(Sources: CNBC TV18, Economic Times, The Telegraph)