Govt eases SEZ rules to boost semiconductor, electronics component manufacturing; Micron to invest Rs 13k cr in Gujarat SEZ

Semiconductor chips

The Union Ministry of Commerce and Industry on June 9 announced that it has introduced several significant reforms in the Special Economic Zones (SEZ) rules in order to boost semiconductor and electronics component manufacturing in India.

In a press release, the ministry noted that manufacturing in these sectors is highly capital intensive, dependent on imports and involve long gestation periods before generating profits. It noted that the amendments to the existing rules have been made to promote pioneering investments and boost manufacturing in these high technology sectors. Moneycontrol first reported the development on June 5.

Here are the latest changes to the existing SEZ rules:

• The government has amended Rule 5 of SEZ Rules, 2006. Thereby, an SEZ set up exclusively for the production of semiconductors or electronic components will now require a minimum contiguous area of only 10 hectares, as against the earlier requirement of 50 hectares.
• The government has also amended Rule 7 of SEZ Rules, 2006. This will now allow the Board of Approval for SEZs to ease the condition requiring SEZ land to be encumbrance free, in cases where the land is mortgaged or leased to central or state government, or their authorized agencies.
• Rule 53 of the SEZ Rules, 2006 has been amended to allow the value of goods received and supplied on a free-of-cost basis to be included in Net Foreign Exchange (NFE) calculations.
• Rule 18 meanwhile was amended to allow SEZ units in semiconductor and electronics component manufacturing sector to also supply domestically into the Domestic Tariff area as well, after paying the applicable duties.

After the amendment were notified by the Department of Commerce on June 3, the Board of Approval for SEZs approved Micron Semiconductor Technology's proposal to set up a SEZ for manufacturing of semiconductors, and that of Hubballi Durable Goods Cluster (Aequs Group) to build a SEZ for production of electronic components.

Micron will set up the SEZ spanning across an area of 37.64 hectors in Gujarat’s Sanand with an estimated investment of Rs 13,000 crore. Aequs meanwhile will establish its SEZ in Karnataka’s Dharwad over an area of 11.55 hectors, with an estimated investment of Rs 100 crore.