Union Budget 2026: Four Coastal States Identified for India’s Rare Earth Corridors

India is making a decisive move to secure its future in high-tech and strategic manufacturing. While presenting the Union Budget 2026-27, Honorable the Finance Minister announced the creation of dedicated rare earth corridors in the select mineral rich states. The decision comes at a time when global supply chains for critical minerals are under stress. By focusing on domestic capacity for rare earth processing and magnet manufacturing, India aims to reduce import dependence and strengthen industries such as electronics, electric vehicles, and defense.

What Are Rare Earth Corridors ?

• Rare earth corridors are integrated industrial zones focused on the mining, processing, and manufacturing of rare earth materials.
• These elements are critical for producing permanent magnets, which are essential components in electric vehicles, wind turbines, electronics, defence systems, and semiconductors.
• Although India has significant rare earth reserves, it largely depends on imports for processed materials.
• Dedicated corridors are meant to close this gap by creating end-to-end domestic value chains, from minerals to finished high-value products.

States Identified for Rare Earth Corridors

• The Finance Minister announced support for Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, all of which are rich in mineral resources, particularly beach sand minerals and other rare earth-bearing deposits.
• These states already have port access, industrial ecosystems, and skilled manpower, making them suitable for large-scale rare earth processing and manufacturing.
• The corridors are expected to attract investment, create jobs, and position these states as hubs for strategic mineral-based industries.

Rare Earth Permanent Magnet Scheme Explained

• The proposal builds on a scheme launched in November 2025 called the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPM). 
• The government approved a financial outlay of ₹7,280 crore under this scheme. Its goal is to establish 6,000 metric tonnes per annum (MTPA) of integrated REPM manufacturing capacity in India.
• Importantly, the scheme covers the entire value chain, from rare earth oxides to finished magnets, ensuring deeper industrial capability.

Boost to Manufacturing Infrastructure

• To support rare earth and other advanced manufacturing, the Budget also proposed setting up high-tech tool rooms by central public sector enterprises.
• These tool rooms will function as digitally enabled automation service bureaus, capable of designing, testing, and manufacturing high-precision components at scale and at lower cost.
• This infrastructure is crucial for industries that rely on exacting standards, such as electronics, aerospace, and defence manufacturing.

Question

Q. Which states have been proposed for dedicated rare earth corridors?

A. Gujarat, Rajasthan, Maharashtra, Karnataka
B. Odisha, Kerala, Andhra Pradesh, Tamil Nadu
C. Punjab, Haryana, UP, Bihar
D. West Bengal, Assam, Tripura, Manipur