4 min readNew DelhiFeb 2, 2026 07:08 AM IST
From dedicated rare earth corridors to customs duty exemptions, the Union Budget FY27 has marked a sharper push to build India’s critical minerals ecosystem. The Budget proposed establishment of dedicated rare earth corridors in India’s coastal states — Odisha, Kerala, Andhra Pradesh and Tamil Nadu — aimed at promoting mining processing, research and manufacturing. It also announced exemption of basic customs duty on import of capital goods required for processing of critical minerals.
Announcements are considered as part of the government’s broader effort to secure the entire critical minerals supply chain — from domestic exploration and mining to processing, recycling and overseas acquisition.
The push comes against the backdrop of China’s overwhelming dominance across the global critical minerals and rare earth value chain. Over the past year, Beijing has imposed curbs on several critical and heavy rare earth minerals amid escalating trade tensions with the US. Although some curbs were eased following talks between US President Donald Trump and Chinese President Xi Jinping, the prolonged controls have already forced countries — including India — to diversify supply and dependence.
Rare earth corridor in coastal states
Presenting the Budget in the parliament, Finance Minister Nirmala Sitharaman said the proposal to establish dedicated rare earth corridors is in line with the recently announced scheme to promote manufacturing of Sintered Rare Earth Permanent Magnet (REPM). With financial outlay of Rs. 7,280 crore, the scheme 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.
It also involves 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 units. 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.
India imported over 53,000 mt of rare earth magnets during the FY25. India’s consumption of rare earth permanent magnets is expected to double by 2030, but it currently meets its demand primarily through imports.
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Rajib Maitra, Partner, Deloitte India said the measures announced in the Budget 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.
Boost for processing
The announcement to exempt basic customs duty on import of capital goods required for processing of critical minerals is expected to boost India’s nascent critical mineral processing capacity. Processing is considered as one of the key bottlenecks in India’s critical mineral ecosystem as it depends heavily on imports of refined minerals and components.
“Minerals processing is highly capital intensive and often equipments are imported. Reduction in customs duty reduces the overall project costs and increases project competitiveness,” Rishabh Jain, Fellow at Council on Energy, Environment and Water said.
The Budget also emphasised on incentivising the prospecting and exploration of critical minerals as India targets 1200 critical mineral exploration projects by FY31.