Union Finance Minister Nirmala Sitharaman made a historic announcement while presenting the Union Budget 2026-27 in Parliament on 1 February 2026. He said that the government will establish Rare Earth Corridor. This corridor will be built especially in those four states where there is abundance of rare earth minerals. These include Odisha, Kerala, Andhra Pradesh and Tamil Nadu.
What did the central government say on rare earth minerals in the budget?
Finance Minister Nirmala Sitharaman clearly said in her budget speech, ‘We will now support mineral-rich states like Odisha, Kerala, Andhra Pradesh and Tamil Nadu to set up dedicated rare earth corridors. Their objective is to promote mining, processing, research and manufacturing.
This move is based on the Rare Earth Permanent Magnets Scheme launched in November 2025, for which a provision of Rs 7,280 crore was made. Now this scheme is being further strengthened in Budget 2026.
What are rare earth minerals and why are they so important?
Rare Earth Elements (REE) are a group of 17 minerals, such as neodymium, dysprosium and praseodymium etc. These are called ‘new generation oils’ because modern technology is difficult without them. They are used in many ways:
- Batteries and motors for electric vehicles (EV).
- Permanent magnets (which are used in high-speed motors).
- Renewable energy (wind turbine, solar panels).
- Smartphones, computers, hi-tech gadgets.
- Defense Equipment (Missile, Radar, Jet Engine).
- Aerospace and Clean Energy Technology.
Refining of these minerals is very complex, because first it is mined, then crushing, separation, chemical processing and finally high-purity refining.
What is the problem of China’s monopoly and India?
China is the largest supplier of rare earths in the world. He controls about 60% of global mining and more than 90% of processing/refining. 90% of permanent magnets are also produced in China. In the past years, China has banned or limited exports several times, due to which the global supply chain was affected. India is also largely dependent on China for these minerals, because more than 45% of India’s rare earth imports come from China. Because of this, India’s EV, renewable energy, defense and high-tech industries are at risk. This announcement of Budget 2026 is to end this dependency.
What will the Rare Earth Corridor do?
This will be a special network that will promote mining, set up processing plants, support research and development, promote manufacturing (especially permanent magnets) and strengthen the supply chain by connecting these four states.
These states were chosen because the beach sands here contain a lot of monazite (the main rare earth source). According to one estimate:
- Andhra Pradesh: 3.69 million tonnes
- Odisha: 3.06 million tonnes
- Tamil Nadu: 2.46 million tonnes
- Kerala: 1.84 million tonnes
Overall, India has about 11 million tonnes of reserves. Along with this, 2.5% basic custom duty on the material used to make high-end permanent magnets from monazite was removed in the budget. Relief in custom duty will be given on import of machinery and equipment required for rare earth processing. This will increase domestic production, reduce imports and India itself will be able to supply to the world.
What benefits will India get from this?
India can become a superpower because of rare earth minerals, because control over these minerals will provide strategic advantage. India will become a global player in EV, clean energy, AI, semiconductor and defense…
- Self-reliant India will get new strength. Make in India, EV mission and renewable energy targets will be accomplished.
- Thousands and lakhs of jobs will be created in mining, processing, research, factories.
- Industry experts (like CII) say that with this India can become a leader in rare earth magnets and critical minerals.
- Defense and high-tech sectors will be strong.
