SEZ rule changes to support technology production
Government Notifies SEZ Reforms for Electronics and Semiconductor Growth: The Ministry of Commerce and Industry has recently updated the Special Economic Zones (SEZ) Rules in 2025 to boost semiconductor and electronics component manufacturing in India. One major reform is the reduction of the minimum land requirement for SEZs dedicated exclusively to semiconductor and electronics units—from 50 hectares to just 10 hectares. This step is expected to encourage more high-tech units to set up in smaller areas, promoting efficient land use.
Additionally, the government now requires that the value of goods received or exported on a Free-of-Cost (FOC) basis be included while calculating Net Foreign Exchange (NFE). NFE is the difference between how much foreign currency a unit earns (through exports) and how much it spends (mainly on imports). This ensures that the actual economic contribution of each unit is measured more accurately.
What are SEZs and how do they function?
A Special Economic Zone (SEZ) is a duty-free, geographically marked area that is considered a foreign territory for trade purposes. This allows businesses to operate under relaxed trade laws, especially concerning duties and tariffs. The idea is to promote exports, attract foreign investments, and generate employment. The SEZ Policy came into effect in 2000, followed by the SEZ Act of 2005.
SEZs contribute to India’s economy by encouraging industrialisation and easing trade barriers for export-driven businesses. Over the years, these zones have supported the IT, pharma, textile, and now, semiconductor sectors.
Reforms backed by Baba Kalyani committee
The Baba Kalyani Committee, which studied SEZs, recommended that India shift focus from just export growth to broader economic and employment generation. It proposed transforming SEZs into Employment and Economic Enclaves (3Es). The committee also highlighted the need for separate policies for services and manufacturing sectors within SEZs.
Government initiatives driving electronics and chip sector
To support semiconductor production, India launched the Semicon India programme, which includes schemes like:
- Scheme for setting up Semiconductor Fabs
- Design Linked Incentive Scheme
- Modernisation of Semiconductor Laboratory in Mohali
For electronics manufacturing, India runs schemes such as:
- Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)
- Modified Electronics Manufacturing Cluster (EMC 2.0)
- Production Linked Incentive (PLI) Schemes for electronics
These reforms align with India’s Atmanirbhar Bharat vision, focusing on self-reliance in critical technology sectors. Globally, with rising ocean acidification and other climate challenges threatening marine ecosystems, nations are also prioritising sustainable industrial practices. India’s approach to electronics manufacturing now aims to balance economic development and ecological responsibility.
Static Usthadian Current Affairs Table
Government Notifies SEZ Reforms for Electronics and Semiconductor Growth:
| Topic | Details |
| SEZ Definition | Duty-free enclave considered foreign territory for trade |
| SEZ Policy Year | Announced in 2000, Act passed in 2005 |
| Recent SEZ Rule Change | Land requirement for electronics SEZ reduced to 10 hectares |
| NFE Inclusion Rule | Now includes Free-of-Cost goods in NFE calculation |
| Baba Kalyani Report | Recommended shift to Employment and Economic Enclaves (3Es) |
| Semiconductor Initiatives | Semicon India programme, Fab setup scheme, Design incentive |
| Electronics Schemes | PLI, SPECS, EMC 2.0 |
| NFE Full Form | Net Foreign Exchange |
| Key Ministry | Ministry of Commerce and Industry |
| Static GK Fact | Mohali has India’s Semiconductor Laboratory |
