The government has recently made significant changes to the regulations governing the establishment of special economic zones (SEZs) for the production of semiconductors and electronic components. These adjustments, announced on June 9, 2025, include a reduction in the minimum land requirement for such units and the permission for SEZ semiconductor facilities to supply products within India, not just for export.

As a result of these modifications, the Ministry of Commerce and Industry has given the green light for the development of two SEZ facilities in Gujarat and Karnataka, with a combined investment of ₹13,100 crore.

Recognizing the capital-intensive nature of manufacturing in these sectors, which often involves lengthy periods before becoming profitable, the Ministry stated that the rule changes aim to encourage pioneering investments and enhance production in these advanced technology fields.

One of the key changes is the amendment to Rule 5 of the SEZ Rules, 2006, which now requires an SEZ dedicated to semiconductor or electronic component manufacturing to have a minimum contiguous land area of 10 hectares, down from the previous 50-hectare requirement.

Moreover, the amendment to Rule 18 allows SEZ units in the semiconductor and electronics component sectors to sell their products domestically in India after paying the necessary duties, in addition to exporting. Traditionally, SEZs have primarily focused on exports.

Additionally, the amendment to Rule 7 permits the Board of Approval for SEZs to relax the condition of encumbrance-free land in cases where it is mortgaged or leased to the Central or State Government or their authorized agencies.

These regulatory changes, issued by the Department of Commerce on June 3, 2025, paved the way for the approval of proposals by Micron Semiconductor Technology India and Hubballi Durable Goods Cluster Private Ltd (a part of the Aequs Group) to establish SEZs for semiconductor and electronic component manufacturing.

Micron will set up its SEZ facility in Sanand, Gujarat, with an estimated investment of ₹13,000 crore, while Aequs plans to establish its SEZ in Dharwad, Karnataka, with an estimated investment of ₹100 crore.

The Ministry's release emphasized that these amendments will drive high-tech manufacturing in India, foster the growth of the semiconductor manufacturing ecosystem, and generate skilled employment opportunities in the country.