Union Budget 2026-27 Unveils Strategic Push for Rare Earth Corridors in Four Coastal States
In a significant move aimed at bolstering India's strategic mineral independence, Union Finance Minister Nirmala Sitharaman, during her Budget 2026-27 speech, proposed the establishment of dedicated rare earth corridors in the coastal states of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. This initiative represents a crucial step in the nation's efforts to secure its supply chain for critical minerals essential for modern technology and defense applications.
Strategic Importance and Government's Vision
"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," declared Sitharaman. This announcement aligns with the government's broader scheme to promote the manufacturing of Sintered Rare Earth Permanent Magnets (REPM), which carries a substantial financial outlay of Rs 7,280 crore.
The proposal is particularly timely given the global geopolitical landscape. China currently dominates the rare earth sector, controlling over 90 per cent of both the manufacturing and processing of the raw materials required to produce these vital magnets. By developing domestic capabilities, India aims to reduce its vulnerability to external supply disruptions and enhance its self-reliance in this critical area.
Comprehensive Support for REPM Manufacturing
Under the newly announced scheme, the government has set an ambitious target to support 6,000 metric tonnes per annum (MTPA) of integrated REPM manufacturing capacity. This capacity will be allocated among five beneficiaries selected through a transparent competitive bidding process, with each eligible entity receiving support for up to 1,200 MTPA.
To incentivize production, selected beneficiaries will receive:
- Sales-linked incentives worth Rs 6,450 crore distributed over a five-year period.
- A capital subsidy of Rs 750 crore specifically designated for establishing integrated REPM manufacturing facilities.
Critical Applications and Growing Domestic Demand
Rare earth permanent magnets are indispensable components in a wide array of advanced technologies. Their applications span multiple sectors, including:
- Electric vehicles (EVs) and their charging infrastructure.
- Renewable energy systems such as wind turbines.
- Consumer electronics and advanced computing devices.
- Aerospace and defense technologies, where high-performance magnets are crucial.
The demand for these magnets in India is experiencing a sharp upward trajectory, driven primarily by the government's vigorous push for large-scale renewable energy expansion and the rapid adoption of electric vehicles. During the fiscal year ending March 2025, India imported over 53,000 metric tonnes of rare earth magnets, highlighting a significant dependency on foreign sources.
Projections indicate that India's consumption of rare earth permanent magnets is expected to double by the year 2030. Currently, the nation meets the majority of its demand through imports, making the development of domestic production corridors not just an economic imperative but a strategic necessity.
Foundation in Beach Sand Minerals
In India, the principal source of rare earths is Beach Sand Minerals (BSM). Within BSM ore, a prescribed substance called monazite occurs. Monazite is a phosphate mineral that contains elements such as Uranium and Thorium, making its processing and management a specialized activity that requires careful regulation and advanced technological support.
The establishment of dedicated corridors in the identified coastal states is expected to streamline mining operations, enhance processing capabilities, foster research and development, and ultimately create a robust manufacturing ecosystem for rare earth products within the country.
