Relaxation of SEZ Rules for Semiconductors

1. Why Semiconductors Matter

• Critical for Digital Economy: Power all electronics (phones, AI, IoT, automotive, etc.).

• Geopolitical Risk: China dominates 35% of global supply; post-COVID, nations seek de-risking via local manufacturing.

2. Key SEZ Rule Relaxations (June 2024)

• Reduced Land Requirement:

  • Earlier: 50 hectares for semiconductor/electronics SEZs.

  • Now: 10 hectares (lower investment threshold).

• Encumbrance-Free Land Rule Eased:

  • Earlier: SEZ land needed clear legal titles (delayed projects).

  • Now: BoA can relax this condition to speed up approvals.

• Domestic Sales Allowed:

  • SEZs (traditionally export-only) can now supply Indian market after paying duties.

3. Expected Benefits

• Boost to "Make in India": Attracts smaller firms with reduced land costs.

• Faster Setup: Simplified land rules cut bureaucratic delays.

• Supply Chain Resilience: Domestic sales reduce reliance on volatile global trade.

4. Immediate Impact

• Micron’s Gujarat Plant: ₹13,000 crore investment (37.64 hectares).

• Aequs’ Karnataka Hub: ₹100 crore for electronics (11.55 hectares).

5. Challenges

• Long-Term Viability: Will incentives offset high R&D/manufacturing costs?

• Global Competition: Need more policy support (e.g., subsidies, R&D grants).

Why Relevant for UPSC?

Prelims (Economy & Tech)

• Keywords: SEZ Rules 2006, Semicon India Programme (₹76,000 crore), Micron.

• Data: 10-hectare rule, China’s 35% semiconductor share.

Mains (GS-3: Growth & Industry)

• Potential Questions:

  • "How can relaxed SEZ rules catalyze India’s semiconductor ambitions?"

  • "Discuss the role of semiconductors in achieving tech self-reliance."

Key points

• SEZ relaxations aim to attract semiconductor/electronics investments.
• Smaller land needs and domestic sales boost viability.
• Early wins: Micron & Aequs projects (₹13,100 crore total).
• Long-term success depends on sustained policy support.