Budget 2026: Centre to create rare-earth mineral corridors in four states

Building on its ₹7,280-crore incentive package for manufacturing rare-earth magnets in India, the Centre will create four rare-earth mineral corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, Union finance minister Nirmala Sitharaman said in her Budget 2026 speech.

The Budget 2026 announcement follows the Union cabinet’s approval in November 2025 of a ₹7,280-crore fund to support the domestic production of rare-earth magnets. The fund will back the establishment of five manufacturing plants and provide sales-linked incentives for every kilogramme of magnets sold.

India has one of the world’s largest rare-earth deposits, estimated at about 6.9 million tonnes.

The top states with monazite reserves—the key mineral that contains rare-earth elements—include Andhra Pradesh, Gujarat, Jharkhand, Kerala, Maharashtra, Odisha, Tamil Nadu, and West Bengal, according to the India Minerals Yearbook 2022, the latest publicly available edition.

The government has chosen the top four states—Andhra Pradesh (3.78 million tonnes of monazite), Odisha (3.16 million tonnes), Tamil Nadu (2.47 million tonnes), and Kerala (1.84 million tonnes). In total, these four states account for 89% of 12.73 million tonnes of monazite reserves, according to data from the India Minerals Yearbook 2022.

However, the manufacturing of rare-earth magnets is an energy-intensive and toxic-waste-generating value chain. It begins with mining rare-earth ores, which are processed into oxides, then into alloys, and later into magnets.

Self-reliance push

The move shows the government’s wish to double down on the rare-earth segment of manufacturing, according to economists.

“The announcement of rare-earth corridors some months after an incentive scheme for setting up magnet manufacturing plants shows that the incentive scheme is not an isolated effort,” said Abhay Tilak, director at the Indian School of Political Economy.

Tilak also said the inclusion of Tamil Nadu among the four states could be an advantage, as it is home to an automotive manufacturing hub, and rare-earth magnets are used in automobile transmissions.

Corridors, when created, offer benefits to industries similar to those of special economic zones (SEZs). These benefits in the rare-earth value chain can include concessional land and power tariffs, as well as tax benefits, experts added.

Sitharaman's budget speech did not reveal details about these corridors.

The move could signal investment in this sector, according to industry stakeholders. “What we expect is single-window clearances, concessions of land acquisition, utilities bills, and even on taxation, which are commonly given to industrial clusters, and can potentially bring in investments, create jobs, and build a domestic ecosystem for making rare-earth products,” said Nitin Gupta, chief executive and co-founder of Noida-based Attero Recycling Pvt. Ltd, which plans to spend ₹2,000 crore over the next three years to expand its battery recycling and critical minerals refining capacity.

The move also marks a strategic shift from import diversification to domestic value-chain creation—the establishment of these corridors is directly relevant to sectors such as electric vehicles, wind turbine generators, and grid-scale energy storage services.

It strengthens India’s bargaining position in global clean-tech supply chains and is likely to be a precursor to domestic content and value-addition norms across clean-energy technologies, said Alekhya Dutta, fellow and director of the electricity and new energy division at think tank The Energy and Resources Institute (Teri).

Think tank CEEW's analysis highlights that mineral processing is one of the key missing links in the critical minerals supply chain, said Rishabh Jain, fellow, CEEW. “However, to ensure these corridors succeed, the government must follow up with robust offtake guarantees to secure domestic demand, double down in research and development, and facilitate technology transfer from international partners for complex sintering processes by leveraging partnerships with countries like the UK, Japan, and the EU,” he said.