Budget 2026-27 gives big push to rare earths; these 4 states to get dedicated corridors
Odisha, Kerala, Tamil Nadu, and Andhra Pradesh to host mining hubs as Centre removes import duties on capital goods to reduce dependence on China
The urgency to mine and utilise rare earth minerals was evident in the Union Budget 2026-27 presented by Finance Minister Nirmala Sitharaman on Sunday (February 1).
She announced the establishment of dedicated Rare Earth Corridors to reduce India’s dependence on imports, particularly from China.
Import duty has also been exempted on capital goods needed for processing critical minerals to boost mining and processing.
States that get rare earth corridors
The corridors will be established in four mineral-rich states of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.
The initiative aims to create an integrated domestic ecosystem for mining, processing, research, and manufacturing of rare earth elements.
Also read: Budget 2026: Big push for BJP-ruled Odisha
A primary goal is to support the production of Sintered Rare Earth Permanent Magnets (REPMs), which are critical for electric vehicles (EVs), renewable energy (wind turbines), defence, aerospace, and electronics. Currently, India’s demand for REPMs is met primarily through imports.
Rare earth deposits
The State-run IREL (India) Limited remains the primary producer of rare earth oxides and will be central to supplying raw materials for these corridors.
The Orissa Sands Complex (OSCOM), located at Chatrapur in Ganjam district, is IREL’s flagship unit and will serve as a primary node. It already hosts a Rare Earth Extraction Plant (REEP) with an installed capacity of 11,200 tonnes per annum of mixed rare earth chlorides.
A new integrated mining and mineral processing plant is being developed in Puri as a joint venture (IREL-IDCOL Ltd) between IREL (India) and the Odisha Mining Corporation.
Tamil Nadu’s coastal districts, including Kanniyakumari, Thoothukudi, Tirunelveli, and Cuddalore, possess significant reserves of monazite, the principal ore for rare earths, in India.
Also read: India’s race for Rare Earths: PLI, mining push, and a long road to tech independence
The Kerala route connects Vizhinjam Port to Chavara and further to Kochi, with abundant monazite beach sand deposits in the coastal belt, particularly in Chavara (Kollam district), which contains significant reserves of thorium and scandium.
The Andhra corridor runs along its 974-km coastline, stretching from Srikakulam to Nellore. The key nodes include Bhimunipatnam, Kalingapatnam, Kakinada, Narsapur, Machilipatnam, Chirala, Vodarevu, Ramayapatnam, and Dugarajapatnam.
The region is rich in monazite-rich beach sands, which contain 55–60 per cent rare earth oxides and 8–10 per cent thorium. Andhra Pradesh holds an estimated 30–35 per cent of India’s monazite reserves.
Supporting schemes
Sitharaman also noted in her Budget speech that a REPM Scheme was launched in November 2025 with an outlay of Rs 7,280 crore to provide sales-linked incentives (Rs 6,450 crore) and capital subsidies (Rs 750 crore) for magnet manufacturing.
The scheme will support the creation of integrated REPM manufacturing facilities involving the conversion of rare earth oxides to metals, metals to alloys, and alloys to finished REPMs.
The initiative is aimed to establish 6,000 metric tonnes per annum (MTPA) of integrated REPM manufacturing in India, thereby enhancing self-reliance and positioning India as a key player in the global REPM market.
Also read: Rare earths scheme gets Cabinet nod; PM Modi hails historic decision
The finance minister also proposed to reduce customs duty on monazite to zero from the existing 2.5 per cent. Monazite is a reddish-brown phosphate mineral, typically found in igneous and metamorphic rocks or as heavy grains in placer deposits, serving as a primary ore for rare-earth elements (cerium, lanthanum, neodymium) and radioactive thorium.
Besides, a Rs 1,500-crore scheme (FY26–FY31) was also announced to promote the recovery of critical minerals from e-waste and industrial scrap.
The corridors complement the broader National Critical Minerals Mission, which has an outlay of approximately Rs 16,300 crore.
Market impact
On Budget day, shares of key mining companies rose. That of Gujarat Mineral Development Corporation (GMDC) jumped nearly 5 per cent, while NMDC Ltd saw an uptick of about 1 per cent.
Also read: Rare earths: Deng Xiaoping's vision, China’s advantage, and India’s race against time
Driven by the rapidly growing demand from EVs, renewable energy, industrial applications, and consumer electronics, India’s consumption of REPMs is expected to double by 2030 from 2025, the government had earlier said.