Budget 2026: Rare-earth hubs to be set up in Odisha, Kerala, Andhra, TN

FM Nirmala Sitharaman's Union Budget 2026 has proposed supporting Odisha, Kerala, Andhra and Tamil Nadu for dedicated rare-earth corridors for mining, research, and production of rare-earth magnets

India’s plan to boost dedicated rare-earth magnet manufacturing received a boost as Finance Minister Nirmala Sitharaman presented Union Budget 2026 on February 1. As part of a broader strategy to scale up manufacturing in strategic sectors and reduce India’s dependence on imports of critical components, Sitharaman proposed supporting Odisha, Kerala, Andhra Pradesh, and Tamil Nadu for dedicated rare-earth corridors for mining, research, and production of rare-earth magnets.

Seven strategic sectors at the core of manufacturing push

FM Sitharaman outlined the initiative under what she described as the government’s “first kartavya” of scaling up manufacturing in seven strategic and frontier sectors to accelerate economic growth. “Our government has undertaken comprehensive reforms towards creating employment, boosting productivity and accelerating growth,” she said, linking the manufacturing push to job creation, productivity gains and infrastructure expansion. 

“India will continue to take confident steps towards Viksit Bharat, balancing ambition with inclusion. As a growing economy with expanding trade and capital needs, India must also remain deeply integrated with global markets. We have maintained fiscal prudence and monetary stability while maintaining a strong thrust on public investments. India must be deeply integrated with global markets exporting more and attracting foreign investment,” she said.    ALSO READ | Budget 2026: Govt to roll out Semiconductor Mission 2.0 with ₹40,000 cr

  Commenting on the announcement, Rishabh Jain, fellow at Council on Energy, Environment and Water (CEEW) said, "By anchoring supply chains in mineral-rich states we are finally bridging the critical gap between upstream mining and downstream manufacturing." 

He also sounded a word of caution in order to make the proposal succesful saying, "to ensure these corridors succeed, 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."

Building on rare-earth magnets push

In December last year, the government had approved the “Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnet” with a financial outlay of ₹7,280 crore. The scheme aims to establish 6,000 tonnes per annum of integrated rare-earth permanent magnet manufacturing capacity in India, covering the entire value chain, from rare-earth oxides to finished magnets.

India’s rare-earth reserves remain underutilised

India holds a substantial base of rare-earth minerals, particularly monazite deposits found in coastal beach sands, teri or red sands, and inland alluvial regions, according to the government. 

Official estimates indicate around 13.15 million tonnes of monazite reserves containing nearly 7.23 million tonnes of rare-earth oxides across Andhra Pradesh, Odisha, Tamil Nadu, Kerala, West Bengal, Jharkhand, Gujarat and Maharashtra. These oxides form the primary raw material for downstream rare-earth industries, including permanent magnet manufacturing. 

Despite this resource base, domestic production of permanent magnets remains limited, forcing manufacturers to rely heavily on imports. 

Trade data shows that India sourced a majority of its permanent magnet imports from China between 2022-23 and 2024-25, with import dependence ranging between 59.6 per cent and 81.3 per cent by value, and between 84.8 per cent and 90.4 per cent by quantity. 

The government’s renewed push comes even as China in 2025 throttled the global supply of rare-earth magnets, paralysing many sectors around the world, and evoking greater calls for developing domestic supply chains.