Union Budget 2026–27: India to Set Up Rare Earth Corridors in Coastal States

In her Union Budget 2026–27 speech, Finance Minister Nirmala Sitharaman announced the establishment of dedicated rare earth corridors in India’s coastal states—Odisha, Kerala, Andhra Pradesh and Tamil Nadu—to strengthen domestic capacity in critical mineral supply chains and reduce strategic dependence on imports.

Key Announcements

• The proposal aligns with a recently launched scheme to promote manufacturing of Sintered Rare Earth Permanent Magnets (REPM).
• Financial outlay: ₹7,280 crore
• Target capacity: 6,000 metric tonnes per annum (MTPA) of integrated REPM manufacturing
• Beneficiaries: 5 firms selected through competitive bidding
• Allocation: Up to 1,200 MTPA per beneficiary

Why REPMs Matter

REPMs are high-strength magnets essential for:

• Electric vehicles (EVs)
• Renewable energy systems (especially wind turbines)
• Electronics
• Aerospace and defence technologies

Currently, the global REPM supply chain is highly concentrated, with China controlling over 90% of both manufacturing and processing of the raw materials required for these magnets—posing major strategic and economic risks.

India’s Rare Earth Resource Base

• In India, Beach Sand Minerals (BSM) are the principal source of Rare Earth Elements (REEs).
• BSM contains monazite, a phosphate mineral that includes uranium and thorium, making its handling strategically sensitive.

Role of IREL (India) Limited

• IREL (India) Limited, a PSU under the Department of Atomic Energy, is the country’s primary producer of rare earth elements.
• It produces high-purity rare earth oxides from monazite.
• IREL operates:
  • Three locations with integrated mining and mineral sand processing facilities
  • Separate facilities for extraction and refining of rare earths