Budget proposal for rare earth corridors will cut import dependence, boost domestic manufacturing

New Delhi: The budget proposal to set up dedicated rare earth corridors in mineral-rich states such as Odisha, Kerala, Andhra Pradesh and Tamil Nadu is part of the govt’s plan to cut import dependence and boost domestic manufacturing, officials said.

Rare earths — a group of 17 metallic elements essential for high-performance magnets, electronics and clean energy technologies — are a key input for electric vehicles, wind turbines, defence systems, consumer electronics and semiconductors, sectors central to India’s clean energy transition.




Though relatively abundant in the earth’s crust, they are rarely found in concentrated and economically viable deposits, and their extraction and processing are complex, particularly when associated with radioactive elements. As India scales up renewable energy, electric mobility and domestic manufacturing, securing rare earth supply has become a strategic priority.

Officials said the Atomic Minerals Directorate for Exploration and Research (AMD), under the department of atomic energy, has undertaken exploration across coastal, inland placer sands and hard rock terrains, estimating 136 beach sand mineral deposits containing over 13.1 million tonne of monazite — a key thorium and rare earth-bearing mineral — across states such as Tamil Nadu, Kerala, Andhra Pradesh, Odisha, Maharashtra and Gujarat. These deposits account for about 7.2 million tonne of in-situ rare earth oxide resources.

Replying to a question in the Rajya Sabha on Tuesday, Union mines minister G Kishan Reddy said three hard rock deposits in Rajasthan and Gujarat hold around 1.3 million tonne of rare earth oxide resources.

Monazite, which contains radioactive elements, is classified as a prescribed substance, placing its mining and processing directly under govt control. India is among a few countries with the capability to extract and refine rare earths, though its resources are relatively low-grade and largely comprise light rare earth elements.

The minister said 46 critical mineral blocks, including rare earth elements, have been auctioned in six tranches, along with seven exploration licence blocks. The Union Cabinet has approved the National Critical Mineral Mission to ensure long-term supply security, and in November 2025 cleared a Rs 7,280-crore scheme to set up 6,000 tonne per annum of rare earth permanent magnet manufacturing capacity.

Rishabh Jain, fellow at the Council on Energy, Environment and Water, said the proposed corridors build on the national critical minerals mission and the magnet manufacturing scheme by linking policy with mineral-rich states. “By anchoring supply chains in these states, we are bridging the gap between upstream mining and downstream manufacturing. Mineral processing remains a key missing link in the critical minerals supply chain,” Jain said.

However, he added that the success of the corridors would depend on robust offtake guarantees to secure domestic demand, increased investment in research and development, and technology transfer through partnerships with countries such as Japan, the UK and the EU.