To support growth in semiconductor manufacturing, the SEZ Rules are amended to relax land and operational requirements. This facilitates easier setup and better compliance for high-tech units in SEZs.

Amendments –

• 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. – 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 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 Rule 18, in sub-rule (6), –

in clause (a) for the word “shall”, the word “may” shall be substituted; &

for clause (c), the following clause shall be substituted, namely: –

“(c) 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 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 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.