Budget 2026: Centre to develop rare earth corridors to reduce China dependence

Presenting her ninth union budget, finance minister Nirmala Sitharaman proposed targeted support for mineral rich states such as Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to establish dedicated rare earth corridors.

This is expected to have a major impact on India’s engagement with critical minerals.

These corridors will be comprehensive hubs encompassing the entire value chain of rare earth development, spanning mining, processing, research, and advanced manufacturing.


Building on the previous scheme

This announcement builds on the scheme to promote the manufacturing of sintered Rare Earth Permanent Magnets (REPM) approved by the government last year, with an outlay of Rs 7,280 crore. The scheme aims to establish 6,000 metric tonnes per annum (MTPA) of integrated REPM manufacturing capacity in India, covering the full chain from rare-earth oxides to finished magnets in order to enhance self-reliance in the space, and position India as a key player in the global market.

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China problem

At present, India relies heavily on supplies from China, a dependence that has raised strategic concerns given the importance of rare earths in electronics, renewable energy, electric vehicles, defence technologies, and frontier manufacturing.

Odisha, Kerala, Andhra Pradesh, and Tamil Nadu were chosen as they house abundant deposits of monazite and other beach sand minerals, particularly along their coastal belts. These resources are rich in rare earth elements, making them natural candidates for integrated development.

The corridors will not merely focus on extraction but will extend to high-value processing and the production of rare earth magnets, thereby ensuring that India captures greater economic and technological value from its reserves.

Industry body CII on Sunday welcomed the move to establish dedicated corridors, stating that it would help India's leadership in rare earth magnets.

"The establishment of rare earth corridors would promote mining, processing, research, and manufacturing and thus help build India's leadership in rare earth magnets and critical minerals,’’ the CII said in a statement on Sunday.