India will establish dedicated rare earth corridors in the mineral-rich states of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, Finance Minister Nirmala Sitharaman announced during her Union Budget 2026-27 presentation on Sunday.
The initiative aims to build an integrated ecosystem covering mining, processing, research, and manufacturing of rare earth elements and permanent magnets. These materials are essential for clean energy technologies, electric vehicles, electronics, defence equipment, and renewable power systems.
Sitharaman said the move builds on the scheme for rare earth permanent magnets launched in November 2025. That programme targets 6,000 metric tonnes per annum of integrated manufacturing capacity across the full value chain, from rare earth oxides to finished magnets.
“We now propose to support the mineral-rich states of Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated Rare Earth Corridors to promote mining, processing, research and manufacturing,” she stated in her Budget speech.
The corridors target India’s heavy reliance on imports, particularly from China, which dominates global rare earth supply. Domestic reserves, especially monazite-rich beach sands along coastal areas in these four states, offer strong potential. Official estimates show India holds about 13.15 million tonnes of monazite reserves containing roughly 7.23 million tonnes of rare earth oxides, spread across these regions and others.
The proposal aligns with the broader National Critical Minerals Mission, approved earlier with significant funding to secure long-term supplies and strengthen value chains. Additional measures in the Budget include exempting basic customs duty on capital goods needed for critical mineral processing, which should help lower setup costs for facilities.
Industry groups welcomed the announcement. The Confederation of Indian Industry (CII) said the corridors would promote mining, processing, research, and manufacturing, helping India gain leadership in rare earth magnets and critical minerals.
The focus on these coastal states leverages their natural deposits of monazite and other beach sand minerals. Kerala and Tamil Nadu, for example, have extensive coastal reserves rich in rare earth elements. Odisha and Andhra Pradesh also hold promising deposits that can support large-scale operations.
The corridors are expected to create jobs, attract investment, and foster technology transfer while addressing environmental concerns through sustainable practices. They complement other Budget steps, such as expanded support for electronics manufacturing and new freight corridors for efficient mineral transport.
This strategic push comes amid global supply chain disruptions and rising demand for critical minerals in the energy transition. By developing domestic capabilities, India aims to achieve greater self-reliance and strategic autonomy in high-tech sectors.
