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Finance Minister Nirmala Sitharaman in her Budget 2026 speech on February 1, proposed government support for mineral-rich states including Odisha, Kerala, Andhra Pradesh and Tamil Nadu to set up dedicated rare earth corridors aimed at boosting mining, processing, research and manufacturing of critical minerals.
Sitharaman said that the corridors would help strengthen India’s rare earth and critical minerals ecosystem, building on existing policy initiatives. A scheme for rare earth permanent magnets was launched in November 2025, providing an early framework for downstream manufacturing.
According to the Department of Atomic Energy’s data as on January 29, 2026, about 7.23 million tonne (MT) in-situ rare earth elements oxide and 1.18 MT thorium oxide contained in 13.15 MT monazite, 761.97 MT titanium-bearing minerals and 38 MT zircon occurring in the coastal beach, red sands and inland alluvium in parts of Andhra Pradesh, Odisha, Tamil Nadu, Kerala, West Bengal, Jharkhand, Gujarat and Maharashtra.
According to Rajib Maitra, Partner, Deloitte India, dedicated rare earth corridors will help in building a resilient and globally competitive critical minerals and rare earths ecosystem in India.
“These coastal states have beach sand deposits with rich monazite reserves capable of producing essential rare earth elements such as neodymium, praseodymium, etc. In addition, proposed basic customs duty exemption on capital goods for critical minerals processing will enhance the viability of projects and encourage investments in domestic processing,” he said.
He added that it provides the necessary fiscal incentives and regulatory clarity in reducing import dependence and supporting emerging sectors such as electric mobility, renewable energy, and advanced manufacturing.
Rishabh Jain, Fellow, CEEW said that the announcement on rare earth corridors, marks a pivotal shift from national policies and regulatory reforms to state-level execution via local value add.
“It builds on the National Critical Minerals Mission and the recent Magnet Manufacturing Scheme by grounding them in the coastal states. By anchoring supply chains in mineral-rich states we are finally bridging the critical gap between upstream mining and downstream manufacturing,” said Jain.
He said that 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 Japan, UK and EU.
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