Budget 2026-27: Why the push for Rare Earth Corridors in Odisha, Kerala, Tamil Nadu and Andhra Pradesh

Under this scheme, the government aims to support 6,000 metric tonnes per annum (MTPA) of integrated REPM manufacturing capacity, which will be allocated among five beneficiaries selected through a competitive bidding process, with each eligible for up to 1,200 MTPA.

Selected beneficiaries will receive sales-linked incentives worth Rs 6,450 crore over five years, along with a capital subsidy of Rs 750 crore to set up integrated REPM facilities.

Impact of the move

These high-strength REPMs are crucial for a wide range of technologies – from electric vehicles and renewable energy systems to electronics, aerospace, and defence applications. However, their manufacturing is concentrated in just a handful of countries, with China alone controlling over 90 per cent in both manufacturing and processing of raw material needed to produce these magnets.

The demand for REPM is rising sharply in India, with the government’s push for large-scale renewable energy expansion and EV adoption. India imported over 53,000 metric tonnes of rare earth magnets during the fiscal year ending March 2025. India’s consumption of rare earth permanent magnets is expected to double by 2030, but it currently meets its demand primarily through imports.

Rajib Maitra, Partner, Deloitte India the measures will help in building a resilient and globally competitive critical minerals and rare earths ecosystem in India.

“Particularly, these coastal states have beach sand deposits with rich monazite reserves capable of producing essential rare earth elements such as neodymium, praseodymium etc,” Maitra said.

Rishabh Jain, Fellow, Council on Energy, Environment and Water (CEEW) said the announcement of ‘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,” Jain said.

However, he cautioned that to ensure the success of these corridors, 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, United Kingdom and European Union.