Finance Minister Nirmala Sitharaman on Sunday proposed the creation of dedicated rare earth corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, as part of efforts to strengthen domestic production and manufacturing of these critical minerals. The announcement came during her presentation of the Union Budget 2026-27 in Parliament.
“These corridors will support mining, processing, research, and manufacturing of rare earth permanent magnets,” Sitharaman said, building on a scheme launched in November 2025. Rare earths, a group of 17 elements essential for electronics, electric vehicles, and defense technologies, have long been dominated by China, which accounts for nearly 60% of global mine output and 90% of refined production.
The initiative is also part of the government’s push to make India more self-reliant, or atmanirbhar. In line with this goal, Sitharaman announced a ₹40,000-crore outlay for the second phase of the India Semiconductor Mission, which will focus on developing equipment, materials, and full-stack Indian intellectual property. Industry-led research and training centers will also be established to build a skilled workforce.
The rare earth corridors build on the earlier Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets, which has a ₹7,280-crore allocation to develop integrated magnet production covering the entire value chain from oxides to finished magnets. Sitharaman also proposed setting up high-tech tool rooms by central public sector enterprises to enable local, digitally enabled manufacturing of precision components at scale, alongside a scheme to enhance construction and infrastructure equipment manufacturing.
The announcement carries strategic significance as well. Tamil Nadu and Kerala, two of the states chosen for the corridors, are headed to polls later this year. Strengthening domestic rare earth production also reduces India’s vulnerability to global supply disruptions caused by China’s export policies.
Sitharaman presented her ninth consecutive Union Budget, alongside the Economic Survey, which projected India’s GDP growth for 2026-27 at 6.8–7.2%, despite a challenging global environment. The Survey also highlighted historically low inflation of 1.7% during April–December 2025, supported by easing food and fuel prices and gradual GST rate rationalisation.
The rare earth corridors, semiconductor expansion, and high-tech manufacturing initiatives reflect the government’s focus on enhancing domestic industrial capacity, supporting self-reliance, and positioning India as a competitive player in high-tech and strategic sectors.
