Special Economic Zones (SEZs)

Special Economic Zones (SEZs): Recently, in a major policy shift to boost India’s semiconductor and electronics manufacturing ecosystem, the government amended key Special Economic Zone (SEZ) regulations.

• Key Amendments : Reduced Land Requirement (Rule 5): Minimum contiguous land for SEZs in semiconductor or electronic component manufacturing reduced from 50 ha to 10 ha.

o Permission for Domestic Supply (Rule 18): SEZ units in these sectors can now sell in the domestic market on payment of applicable duties, apart from exports.

o Relaxed Encumbrance-Free Land Norms (Rule 7): Board of Approval (BoA) may approve SEZs on mortgaged or government-leased land, easing acquisition hurdles.

• Special Economic Zones (SEZs) : A designated area offering fiscal incentives and relaxed business laws to attract investment and generate employment.

o Designed to overcome infrastructural and regulatory hurdles, improving the ease of doing business.

o India’s first Export Processing Zone (EPZ), the precursor to SEZs, was established in Kandla, Gujarat in 1965.

o The government initiated SEZs under the Foreign Trade Policy in 2000 to address EPZ limitations.

o The Special Economic Zones Act, 2005, and SEZ Rules, 2006 formalised SEZ operations, inspired by China’s model.

o The Board of Approval (BoA), chaired by the Secretary of the Department of Commerce, oversees SEZ approvals and policies.

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