The Department of Commerce vide Notification No. G.S.R. 364(E). dated June 03, 2025, has amended the Special Economic Zones (SEZ) Rules, 2006, effective from June 3, 2025. Key changes include: SEZs dedicated to semiconductor or electronic component manufacturing now require only 10 hectares of contiguous land. The Board may relax the “encumbrance-free” land requirement if mortgaged or leased to government agencies. Rule 18 allows more flexibility in handling finished goods, including domestic supply with applicable duties. For semiconductor manufacturing services, free-of-cost goods will count towards Net Foreign Exchange. Additionally, the minimum land requirement for certain SEZs is reduced from 20 to 4 hectares, as per the revised Annexure II.
In exercise of the powers conferred by section 55 of the Special Economic Zones Act, 2005 (28 of 2005), the Central Government hereby makes the following rules further to amend the Special Economic Zones Rules, 2006, namely-
(1) These rules may be called the Special Economic Zones (Amendment) Rules, 2025.
(2) They shall come into force on the date of their publication in the Official Gazette.
In the Special Economic Zone Rules, 2006 (hereinafter referred to as the principal rules), in rule 5, in sub-rule (2), in clause (a), after the proviso, the following proviso and Explanation shall be inserted, namely-
“Provided further that where a Special Economic Zone is exclusively set up for manufacturing of semiconductors or electronic components, the contiguous land area shall be ten hectares or more.
Explanation. –Â For the purposes of this proviso, the electronic components include display module sub-assembly, camera module sub-assembly, battery sub-assembly, various types of other module sub-assemblies, printed circuit board, li-ion cells for batteries, mobile and information technology hardware components, hearables and wearables.”
In the principal rules, in rule 7, in sub-rule (1), after the proviso, the following proviso shall be inserted, namely: –
“Provided further that the Board may relax the condition of encumbrance free area, in cases where the area is mortgaged or leased to the Central Government or State Government, or their authorized agency on mortgage or for lease, for reasons to be recorded in writing.”
In the principal rules, in rule 18, in sub-rule (6), –
(i) in clause (a) for the word “shall”, the word “may” shall be substituted;
(ii) for clause (c), the following clause shall be substituted, namely: –
“(c)Â finished goods shall be exported out of the country or transferred to the Customs Bonded Warehouse to be maintained by the Overseas Entity or supplied to the Domestic Tariff Area with payment of applicable duties or transferred to the Free Trade and Warehousing Zone Unit to be maintained by the Overseas Entity in the same or different Special Economic Zone as per the instructions of the Overseas Entity;”
In the principal rules, in rule 53, after paragraph D, the following paragraph shall be inserted, namely: –
“(E) For units providing manufacturing services in the semiconductor sector, value of goods received as well as value of goods supplied on free of cost basis shall be included in Net Foreign Exchange calculations and such value shall be determined in accordance with the customs valuation rules, as applicable.”
In the principal rules, in Annexure II, against serial no. 3, in column (4), for the figures and word “20 hectares”, the figures and word “4 hectares” shall be substituted.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/06/Special-Economic-Zones-Amendment-Rules-2025.pdf
