Union Budget 2026: Centre to Support Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu

01 Feb 2026, 08:56 by Vinay Kakkad · KalingaTV

The Union Budget 2026 has proposed the creation of dedicated rare earth corridors in four mineral-rich states — Odisha, Kerala, Andhra Pradesh and Tamil Nadu — to strengthen India’s domestic supply chain for critical minerals.

Announcing the move during her Budget speech, Finance Minister Nirmala Sitharaman said the government will support these states in establishing corridors focused on mining, processing, research and manufacturing of rare earth materials.

While the Budget laid out the policy direction, no specific financial allocation or investment outlay was announced for the rare earth corridors in the Budget speech. Officials indicated that further details, including funding mechanisms and implementation frameworks, are expected to be worked out in coordination with state governments and industry stakeholders.

The corridors are expected to be developed through a mix of policy support, infrastructure facilitation and private sector participation, rather than a single upfront budgetary allocation.

The rare earth corridor proposal builds on the Scheme for Manufacturing of Sintered Rare Earth Permanent Magnets, which was launched in November 2025. That scheme carries a financial outlay of ₹7,280 crore and aims to establish domestic manufacturing capacity for rare earth permanent magnets, a key component used in electric vehicles, wind turbines, electronics and defence equipment.

By linking mineral extraction with downstream processing and manufacturing, the government aims to create an end-to-end value chain within India, reducing dependence on imports.

India currently relies heavily on imports for rare earth processing and permanent magnets, with global supply chains dominated by China. The proposed corridors are intended to address this vulnerability by encouraging localised industrial clusters and faster scaling of domestic capabilities.

In a related move, the Finance Minister also announced a new scheme to support states in setting up three dedicated chemical parks through a challenge-based route. These parks will follow a cluster-based plug-and-play model to boost domestic chemical production and reduce import dependence.

Experts say the combined focus on rare earth corridors and chemical parks signals a broader strategy to strengthen critical and strategic manufacturing ecosystems in India, aligning with goals under Make in India, clean energy expansion and advanced manufacturing.

While Budget 2026 does not specify fresh spending numbers for rare earth corridors, the announcement provides strong policy backing for mineral-rich states to develop integrated rare earth ecosystems. Detailed funding structures and timelines are expected to emerge in subsequent policy notifications.