Special Economic Zones (Amendment) Rules, 2025: Key Changes to Land Requirements, Manufacturing Units, and Export Provisions [Read Order]

The Ministry of Commerce and Industry has notified the Special Economic Zones (Amendment) Rules, 2025 via Notification No. G.S.R. 364(E), marking significant changes to the regulatory framework governing India’s Special Economic Zones (SEZs). The new rules aim to align policy with the evolving needs of high-tech manufacturing sectors, especially semiconductors and electronics, and to improve operational flexibility in land usage and export logistics.

Here are the key highlights and changes introduced:

1. Less Land Needed for Electronics Manufacturing SEZs

Earlier, setting up an SEZ required a large piece of land. But now, if a company wants to set up an SEZ just for making semiconductors or electronic parts, they only need 10 hectares or more of land. This is a big change that lowers the entry barrier for businesses in the electronics industry.

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The government has also explained what counts as “electronic components.” These include:

• Display screens
• Camera and battery parts
• Printed circuit boards (PCBs)
• Lithium-ion battery cells
• Mobile and IT hardware
• Wearables like smartwatches and hearables like earbuds

This rule makes it easier for high-tech companies to set up smaller but specialized SEZs.

2. Easier Use of Land That Is Already Mortgaged or Leased

Earlier, the land for SEZs had to be completely free of any legal claims or debts (called “encumbrance-free”). Now, the rules have been relaxed. If the land is already mortgaged or leased to the Central or State Government or their authorized agencies, it can still be used to set up an SEZ. However, the reason for allowing this must be written down clearly.

This change will help developers use more land options, especially in urban areas where clean, unclaimed land is hard to find.

3. More Choices for Moving or Selling Finished Goods

Companies operating in SEZs now have more flexibility in how they handle finished products. They can:

• Export the goods directly outside India,
• Move them to a Customs Bonded Warehouse (a special storage under government control),
• Sell them within India (Domestic Tariff Area) by paying the required duties (taxes),
• Or move them to a Free Trade and WarehousingZone (FTWZ) in the same or a different SEZ.

This gives businesses more ways to manage their inventory and reach customers both in India and abroad.

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4. Clearer Rules for Calculating Foreign Exchange Earnings

For companies that provide manufacturing services in the semiconductor sector, the rules now state that they must count the value of both received and supplied goods, even if some of those goods were provided free of cost.

This is important because SEZ units are required to earn net foreign exchange, that is, they must bring in more foreign currency than they spend. The value of free goods will now be included in these calculations using standard customs valuation methods.

5. Minimum Land Size Reduced from 20 to 4 Hectares for Certain SEZs

One of the most business-friendly changes is the reduction in the minimum land area needed for certain SEZs. Earlier, a company needed at least 20 hectares of land to set up an SEZ. Now, in specific cases, they only need 4 hectares. This is especially helpful for smaller companies or startups that want to benefit from SEZ policies but can’t afford large plots of land.

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