Why have special economic zones rules been relaxed?, Pg10

Key Highlights:

• The Government of India has relaxed Special Economic Zone (SEZ) Rules to boost semiconductor and electronics manufacturing.
• These changes complement the Semicon India Programme (2022) with an outlay of ₹76,000 crore.
• The goal is to reduce dependence on imports and promote domestic production of critical electronic components.

Detailed Insights:

1. Why are Semiconductors Important?

• Semiconductors power all digital and electronic devices, including phones, computers, cars, and AI systems.
• They are critical to automation, digitisation, and national security.
• As of 2021, China manufactured 35% of global semiconductors, raising supply chain vulnerability concerns during COVID-19.
• India aims to localise semiconductor production to ensure resilience and independence.

2. Recent Amendments to SEZ Rules (June 2025):

• Rule 5: Minimum land requirement for semiconductor/electronics SEZs reduced from 50 hectares to 10 hectares.
• Rule 7: Relaxation of the requirement for land to be encumbrance-free, easing land acquisition hurdles.
• Rule 18: Allows SEZ units to sell products domestically after paying applicable duties, breaking from the traditional export-only model.

3. Impact of Policy Relaxation:

• Though recent, the policy has already led to two new SEZ approvals:
• Micron Semiconductor Technology India: ₹13,000 crore investment in Sanand, Gujarat on 37.64 hectares.
• Hubballi Durable Goods Cluster (Aequs Group): ₹100 crore investment in Dharwad, Karnataka. 
• These SEZs indicate strong investor interest and potential for long-term technology and manufacturing growth.

Mains Mock Question:

Q. Semiconductors are foundational to modern digital economies. Discuss India’s approach to promoting domestic semiconductor manufacturing through SEZ reforms.