In a significant step towards strengthening India’s strategic and high-technology manufacturing ecosystem, the Union Budget 2026–27 has proposed the creation of dedicated Rare Earth Corridors in select mineral-rich coastal states. The announcement was made by the Hon’ble Finance Minister against the backdrop of increasing global stress on critical mineral supply chains.
By focusing on domestic processing and manufacturing of rare earth permanent magnets, India aims to reduce import dependence and support key sectors such as electric vehicles, electronics, renewable energy, semiconductors, and defence.
What Are Rare Earth Corridors?
Rare Earth Corridors are integrated industrial zones designed to support the entire value chain of rare earth elements, including:
- Mining of rare earth-bearing minerals
- Processing and refining of rare earth oxides
- Manufacturing of high-value products such as permanent magnets
Rare earth elements are essential inputs for electric vehicles, wind turbines, consumer electronics, defence systems, and advanced semiconductors.
Despite having sizeable reserves, India has so far relied heavily on imports for processed rare earth materials. The proposed corridors aim to bridge this gap by creating end-to-end domestic manufacturing capacity.
States Identified for Rare Earth Corridors
The Union Budget 2026 proposes support for setting up rare earth corridors in the following four states:
- Odisha
- Kerala
- Andhra Pradesh
- Tamil Nadu
These states are rich in beach sand minerals and other rare earth-bearing deposits. In addition, they offer strategic advantages such as:
- Access to ports and global trade routes
- Existing industrial ecosystems
- Availability of skilled manpower
The corridors are expected to attract investment, generate employment, and position these states as hubs for strategic mineral-based industries.
Rare Earth Permanent Magnet (REPM) Scheme
The corridor proposal builds upon the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPM), launched in November 2025.
Key features of the scheme include:
- Financial outlay: ₹7,280 crore
- Target capacity: 6,000 metric tonnes per annum (MTPA)
- Coverage: Entire value chain — from rare earth oxides to finished magnets
The scheme is aimed at developing deep industrial capability and reducing reliance on foreign suppliers, particularly for strategic sectors.
Boost to Advanced Manufacturing Infrastructure
To further support rare earth and high-technology manufacturing, the Budget also proposes the establishment of high-tech tool rooms by Central Public Sector Enterprises (CPSEs).
- These tool rooms will function as digitally enabled automation service bureaus, capable of:
- Designing and testing high-precision components
- Manufacturing at scale with reduced costs
Such infrastructure is critical for sectors like electronics, aerospace, and defence, where precision and quality standards are extremely high.
Practice Question (Prelims)
Q. Which states have been proposed for dedicated rare earth corridors under the Union Budget 2026?
A. Gujarat, Rajasthan, Maharashtra, Karnataka
B. Odisha, Kerala, Andhra Pradesh, Tamil Nadu
C. Punjab, Haryana, Uttar Pradesh, Bihar
D. West Bengal, Assam, Tripura, Manipur
Correct Answer: B
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