SEZ Reforms Announced 10 Hectare Land Now Enough for Chip Parks

SEZ Land Norms Relaxed for Semiconductor & Electronics Parks

In a major push for ‘Make in India’ and electronics manufacturing, the Indian government has notified key SEZ land reforms aimed at easing entry barriers for semiconductor and electronics units. As per the latest amendment to SEZ Rules, 2006 (via Notification No. GSR 383(E) dated 7th June 2025), the minimum land requirement has been reduced to just 10 hectares, with relaxation in encumbrance norms—making it easier for developers and investors to set up high-tech industrial zones.


What Are the New SEZ Reforms?

Minimum Area Reduced

  • Earlier requirement: 50 hectares (non-sector specific)
  • Now: Only 10 hectares required for:
    • Semiconductor parks
    • Electronics manufacturing zones
    • Other advanced tech-focused SEZs

Encumbrance Norms Eased

  • Previously, land had to be completely free of encumbrances
  • Now, partial encumbrance allowed, provided:
    • The area proposed for SEZ development is clearly demarcated
    • Encumbrances don’t interfere with SEZ functioning

Boost to Private Participation

  • These changes open doors for mid-sized players
  • Encourages cluster-based development in urban and semi-urban areas

Legal Reference:

  • Notification No. GSR 383(E), dated 07.06.2025
  • Issued by: Department of Commerce, Ministry of Commerce & Industry
  • Amended Provisions: Rule 5 of SEZ Rules, 2006

Read the official gazette here.


Why This Matters for India’s Tech Ambitions

✅ Aligned with India Semiconductor Mission (ISM)
✅ Helps meet PLI Scheme targets for electronics & chip manufacturing
✅ Aims to compete with global tech hubs in Taiwan, Korea, and the US


Expert View:

“Reducing the minimum land requirement removes a major entry barrier for tech entrepreneurs and startups. It allows smaller firms to build vertically integrated campuses without worrying about acquiring massive land tracts.”
Ajay Raghavan, Policy Analyst (Tech & Infra)


Benefits for Businesses and Taxpayers

  • Faster project approvals via simplified SEZ applications
  • Lower upfront cost due to smaller land parcels
  • Greater opportunity for joint development models
  • Potential tax benefits under SEZ Act, including:
    • 100% income tax exemption on export income for the first 5 years
    • Exemptions on import duties for capital goods and raw materials

SEZ Reforms and Income Tax: A Quick Note

Developers and units operating under SEZs continue to enjoy tax exemptions under Section 10AA of the Income-tax Act, 1961, subject to conditions. With new norms, more eligible units may benefit.


Quick Comparison: Old vs New SEZ Land Norms

CriteriaOld Norm (Pre-June 2025)New Norm (Post-June 2025)
Minimum Area (Tech SEZs)50 hectares10 hectares
Encumbrance RequirementFully clear land onlyPartial encumbrance allowed
Eligible IndustriesAll sectorsFocus on semiconductors, electronics
Legal BasisSEZ Rules, 2006Amended via GSR 383(E)

FAQs

Q1. Can IT services companies also benefit from the new 10-hectare rule?
➡ No. This relaxation is specific to semiconductor and electronics-focused SEZs.

Q2. Are state governments aligned with these new norms?
➡ Yes. States have been directed to update industrial policy frameworks accordingly.

Q3. Will tax exemptions under Section 10AA continue post these reforms?
➡ Yes, subject to qualifying conditions. Developers and units in SEZs can still avail tax holidays under the Income-tax Act.


Summary

SEZ land rules amended: Minimum area for electronics & semiconductor SEZs reduced to 10 hectares. Partial encumbrance now allowed. Major boost for tech investors.


Final Note:

This policy shift could catalyse India’s emergence as a global hub for electronics and chip manufacturing. If you’re planning to register a SEZ unit or need help claiming tax benefits under SEZ law, reach out to Efiletax for expert compliance support.

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