India relaxes SEZ regulations to enhance semiconductor and electronics production.

In an enhanced effort to boost Semiconductor and Electronics manufacturing in India, the Ministry of Commerce and Industries (MOCI) has revised the SEZ rules to introduce relaxations. The MOCI has issued the updated SEZ rules to foster semiconductor and electronics production.

The most significant change in the amended SEZ Rules is the reduction of the contiguous land requirement from 50 hectares to 10 hectares. This relaxation applies specifically to the establishment of an SEZ designated solely for the manufacturing of semiconductors and electronics.

These relaxations will encompass a variety of semiconductor and electronics-related products, including display module sub-assemblies, camera modules, battery packs, printed circuit boards, lithium-ion cells, and components for mobile devices, IT hardware, hearables, and wearables.
Moreover, responding to a crucial industry request, the revised rules clarify the calculation of Net Foreign Exchange. To qualify for benefits, an SEZ must be a net foreign exchange earner over a five-year period. Previously, goods received or supplied “Free of Cost” were not consistently included in the Net Foreign Exchange computation.

The updated regulations now clarify that goods received or supplied “Free of Cost” will be counted. Given the complex value chains associated with semiconductor products, this clarity will facilitate a more accurate assessment of Net Foreign Exchange.

According to the amended rules, finished products produced by entities within the SEZ can now be sold to the Domestic Tariff Area upon payment of duties. Additionally, the regulations allow for the transfer of finished products to a free trade and warehousing zone, whether in the same SEZ or another.