New regulations slash land size requirements and open domestic sales to boost semiconductor manufacturing
India just gave its high-tech ambitions a strong push. On June 3, the Centre notified sweeping changes to its Special Economic Zones (SEZs) framework, specifically targeting semiconductor and electronics component manufacturing. Two SEZs — one in Gujarat and another in Karnataka — got greenlit almost immediately, with a total investment pegged at ₹13,100 crore.
These rule tweaks aim to break long-standing hurdles like minimum land requirements and tight export-only regulations. It’s clear the government’s betting big on chip-making and electronics to shift the country up the manufacturing value chain.
Smaller Plots, Bigger Dreams
The change that’s likely to grab headlines first is the cut in required land size. Previously, companies needed 50 hectares to set up a semiconductor SEZ. Now? Just 10 hectares.
That’s no small shift.
Micron, the global semiconductor giant, is already in. Its upcoming facility in Sanand, Gujarat, will reportedly draw a staggering ₹13,000 crore. Meanwhile, the Aequs Group’s unit in Dharwad, Karnataka, comes in with a more modest ₹100 crore plan.
One sentence here.
But it’s not just about getting land fast.
These industries, the Ministry of Commerce noted, are capital-intensive, heavily reliant on imports, and take longer to turn profitable. By easing regulations, the government is trying to soften the runway for firms taking that leap.
Not Just for Exports Anymore
One of the major bugbears of the SEZ framework was its strict export mandate. Companies operating inside SEZs were expected to ship their output abroad — making domestic sales a bureaucratic pain.
No longer.
Thanks to amendments in Rule 18, semiconductor and electronics SEZ units can now sell to the Indian market too, as long as they pay the applicable duties.
Let’s break it down:
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Firms can now plan hybrid business models — part export, part domestic.
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The change creates more flexibility in supply chains.
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Domestic OEMs (original equipment manufacturers) may now get better access to locally manufactured chips and components.
This shift might not sound revolutionary to casual observers. But for the manufacturing sector, it’s a potential game-changer in reducing reliance on imports from Taiwan, China, and South Korea.
The Encumbrance Clause Relaxed
Another quiet, but crucial, fix came through Rule 7.
Land earmarked for SEZs no longer needs to be totally encumbrance-free if it’s leased or mortgaged to state or central agencies. Earlier, that clause tripped up several deals and slowed down approvals.
Here’s a real-world impact:
A project that was held back due to minor leasing issues or pre-existing agreements with local authorities can now move forward without starting from scratch.
Two Big Names Already Onboard
Just days after the rulebook got rewritten, two big-ticket proposals sailed through the Board of Approval.
Micron Semiconductor Technology India — part of the U.S.-based chip giant — is putting down ₹13,000 crore in Gujarat. The company already operates in the memory chip space and this new plant is expected to further integrate its India footprint.
Meanwhile, Hubballi Durable Goods Cluster Private Ltd, part of the homegrown Aequs Group, got clearance for its electronics component SEZ in Karnataka. That project is smaller in scale but no less important symbolically — showing that Indian players are also responding to the policy nudge.
The investments come at a time when:
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Global semiconductor supply chains are still recovering from post-COVID shocks.
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India is pushing its Production Linked Incentive (PLI) schemes across electronics, semiconductors, and telecom.
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Western firms are looking to derisk from China and find alternative production hubs.
Here’s a quick table summarizing the two projects:
| Company | Location | Sector | Investment (₹ crore) |
|---|---|---|---|
| Micron Semiconductor Technology India | Sanand, Gujarat | Semiconductor Manufacturing | 13,000 |
| Hubballi Durable Goods Cluster Pvt Ltd | Dharwad, Karnataka | Electronic Components | 100 |
What This Means for India’s Tech Manufacturing Push
There’s no denying it — India has been playing catch-up in semiconductors. For years, we lacked the ecosystem: fabs, foundries, raw material supply, engineering talent, and scale.
But this week’s regulatory shuffle shows the government is trying to change that script, even if it’s one policy tweak at a time.
First, SEZs offer tax incentives and simplified logistics — now made even easier by these fresh rules.
Second, domestic chip buyers (including automakers, telecom firms, and smartphone brands) may finally get locally sourced options.
And third, the global timing couldn’t be better. With the U.S., EU, and Japan all throwing billions into onshoring chip production, India needs to show it’s not just building plans, but actual plants.
