Several major semiconductor companies operating in Gujarat have requested the state government establish a dedicated free trade zone and shared warehousing infrastructure. This would allow for duty-free imports and faster customs clearance of expensive equipment, streamlining logistics and accelerating factory setup.
The main topics covered are the industry's push for specialized trade zones, the operational benefits of such zones for semiconductor manufacturing, and the collaborative industry approach to infrastructure challenges.
Companies like Micron have already received SEZ approvals, and the industry is collectively advocating for these measures to support India's growing semiconductor manufacturing ambitions. The goal is to reduce supply chain friction and enable faster, more cost-effective production scaling.
Semiconductor equipment makers, memory storage suppliers and companies that specialise in chip packaging and testing have approached the Gujarat government, requesting setting up of an exclusive free trade zone and shared warehousing infrastructure for the sector, people in the know told ET.
These companies include Applied Materials, Lam Research, KLA, Micron, Kaynes Semicon and CG Semi. They are establishing, or supplying equipment for, large semiconductor and related facilities in Gujarat, especially at the industrial belt of Sanand and Dholera where Tata Electronics is setting up India's first fabrication plant.
Analysts said having a free trade zone will allow companies to import, assemble and store equipment locally without paying import duties, making logistics smoother and enabling more efficient global supply chain operations.
"We have got representations from Micron and CG Semi. The government is actively working with the industry for the same," a Gujarat government official told ET. "Micron has already been given approval for the SEZ and the representations from industry have mainly been about the shared warehousing and SEZ status."
Kaynes Semicon chief executive Raghu Panicker said the outsourced semiconductor assembly and test (OSAT) company already has approval for a special economic zone (SEZ) at Sanand. âWe are not looking at a separate FTZ (free trade zone),â he said, but added that it would partner with other companies for a shared warehouse.
Semiconductor equipment makers Micron and Applied Materials declined to comment. Memory storage firms Lam Research and KLA, as well as OSAT company CG Semi did not respond to queries from ET.
SEZs are large export-oriented enclaves that allow units based within the area to do manufacturing, R&D and services, while offering significant tax benefits, including duty-free imports and exemptions from GST on domestic procurements. Free trade zones, a subset of SEZs, enable duty-free imports and faster customs clearance, reducing delays that could otherwise hold equipment in customs for weeks.
Since fab ramp speed at manufacturing facilities directly impacts profitability, faster tool installation is critical, Tarun Pathak, research director, Counterpoint Technology Market Research said. "Semiconductor equipment companies such as Applied Materials, KLA Corporation and Lam Research ship systems that can cost $5 million to $200 million per tool and contain thousands of components," he told ET.
These zones reduce logistical friction and enable just-in-time delivery and faster installation, which is crucial during fab ramp, Pathak said.
Not an individual problem
Warehousing and having free trade zones are crucial as India looks to scale its manufacturing ambitions in the semiconductor sector. The industry has recognised that it has to band together to address this issue.
"We have to work together," Jayanth Havanur, senior director at Applied Materials India said during a panel discussion at the India Electronics and Semiconductor Association Vision Summit in Bengaluru in February. "In some of the discussions with the government of Gujarat we are having, we're representing as a group on what we need to do, to enable a free trade zone for importing and exporting parts." While there is an SEZ in Gujaratâs Gift City, the industry is looking to see if building a warehouse is possible, he said.
Lam Research director for public policy and government affairs Arundhati Sanath also echoed this sentiment at the event. "This is not an individual problem," she said. "For Lam Research or Applied Materials to grow in Indiaâfor us it is a focus marketâthis is an industry issue...Building a semiconductor-specific supply chain ecosystem itself is a huge challenge for us. Technology adoption and trade tariffs, all of that is an added challenge to this."
In June last year, the government introduced reforms in SEZ rules to address the specialised needs of semiconductor and electronics component manufacturing sectors.
After amendments to the rules, an SEZ set up exclusively for the manufacturing of semiconductors or electronic components will require a minimum contiguous land area of only 10 hectares, reduced from the earlier requirement of 50 hectares.
Micron would establish its SEZ facility in Sanand over an area of 37.64 hectares, with an estimated investment of Rs 13,000 crore, the government said last year.
These companies include Applied Materials, Lam Research, KLA, Micron, Kaynes Semicon and CG Semi. They are establishing, or supplying equipment for, large semiconductor and related facilities in Gujarat, especially at the industrial belt of Sanand and Dholera where Tata Electronics is setting up India's first fabrication plant.
Analysts said having a free trade zone will allow companies to import, assemble and store equipment locally without paying import duties, making logistics smoother and enabling more efficient global supply chain operations.
"We have got representations from Micron and CG Semi. The government is actively working with the industry for the same," a Gujarat government official told ET. "Micron has already been given approval for the SEZ and the representations from industry have mainly been about the shared warehousing and SEZ status."
Kaynes Semicon chief executive Raghu Panicker said the outsourced semiconductor assembly and test (OSAT) company already has approval for a special economic zone (SEZ) at Sanand. âWe are not looking at a separate FTZ (free trade zone),â he said, but added that it would partner with other companies for a shared warehouse.
Semiconductor equipment makers Micron and Applied Materials declined to comment. Memory storage firms Lam Research and KLA, as well as OSAT company CG Semi did not respond to queries from ET.
SEZs are large export-oriented enclaves that allow units based within the area to do manufacturing, R&D and services, while offering significant tax benefits, including duty-free imports and exemptions from GST on domestic procurements. Free trade zones, a subset of SEZs, enable duty-free imports and faster customs clearance, reducing delays that could otherwise hold equipment in customs for weeks.
Since fab ramp speed at manufacturing facilities directly impacts profitability, faster tool installation is critical, Tarun Pathak, research director, Counterpoint Technology Market Research said. "Semiconductor equipment companies such as Applied Materials, KLA Corporation and Lam Research ship systems that can cost $5 million to $200 million per tool and contain thousands of components," he told ET.
These zones reduce logistical friction and enable just-in-time delivery and faster installation, which is crucial during fab ramp, Pathak said.
Not an individual problem
Warehousing and having free trade zones are crucial as India looks to scale its manufacturing ambitions in the semiconductor sector. The industry has recognised that it has to band together to address this issue.
"We have to work together," Jayanth Havanur, senior director at Applied Materials India said during a panel discussion at the India Electronics and Semiconductor Association Vision Summit in Bengaluru in February. "In some of the discussions with the government of Gujarat we are having, we're representing as a group on what we need to do, to enable a free trade zone for importing and exporting parts." While there is an SEZ in Gujaratâs Gift City, the industry is looking to see if building a warehouse is possible, he said.
Lam Research director for public policy and government affairs Arundhati Sanath also echoed this sentiment at the event. "This is not an individual problem," she said. "For Lam Research or Applied Materials to grow in Indiaâfor us it is a focus marketâthis is an industry issue...Building a semiconductor-specific supply chain ecosystem itself is a huge challenge for us. Technology adoption and trade tariffs, all of that is an added challenge to this."
In June last year, the government introduced reforms in SEZ rules to address the specialised needs of semiconductor and electronics component manufacturing sectors.
After amendments to the rules, an SEZ set up exclusively for the manufacturing of semiconductors or electronic components will require a minimum contiguous land area of only 10 hectares, reduced from the earlier requirement of 50 hectares.
Micron would establish its SEZ facility in Sanand over an area of 37.64 hectares, with an estimated investment of Rs 13,000 crore, the government said last year.
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