Key Takeaways
- Union Budget 2026–27 announces Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu for mining, processing, research, and manufacturing of Rare Earth Permanent Magnets (REPMs).
- ₹7,280 crore REPM Manufacturing Scheme approved in November 2025.
- 6,000 MTPA integrated REPM capacity to be created.
- ₹6,450 crore sales-linked incentives over five years.
- ₹750 crore capital subsidy for advanced facilities.
- Geological Survey of India (GSI) has identified 482.6 million tonnes of rare-earth ore resources.
Introduction
India is making strong efforts to become self-reliant in critical materials by building its own system for producing Rare Earth Permanent Magnets (REPMs). These are high-performance magnets that are essential for modern technologies like electric vehicles, wind turbines, electronics, aerospace, and defence systems. To support this goal, the government approved a ₹7,280 crore scheme in November 2025 to develop a production capacity of 6,000 tonnes per annum. This plan covers the entire process—from extracting rare-earth materials to manufacturing finished magnets.
Along with this, the Union Budget 2026–27 has proposed setting up Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These corridors will help boost mining, processing, research, and manufacturing activities in this sector. All these steps are in line with India’s larger goals of becoming self-reliant (Atmanirbhar Bharat), achieving Net Zero emissions by 2070, and building a developed nation by 2047 (Viksit Bharat).
Strategic Importance and Resource Potential
Rare Earth Permanent Magnets are extremely important because they are used in many advanced and future technologies. They play a key role in clean energy systems like wind turbines and electric vehicles, making them crucial for India’s transition to green energy. They are also essential in defence equipment, electronics, and space technologies, which makes them important for national security and technological independence.
India has significant reserves of rare-earth elements, especially in coastal sands and mineral-rich regions. This gives the country a strong opportunity to develop its own supply chain instead of depending on imports. By using these resources wisely and building domestic manufacturing capacity, India can reduce its dependence on other countries, strengthen its economy, and become an important player in the global market for advanced materials.
India’s Resource Base
India has a strong base of rare-earth resources, which can support the development of industries like Rare Earth Permanent Magnet (REPM) manufacturing. The country has around 13.15 million tonnes of monazite deposits, which contain about 7.23 million tonnes of rare-earth oxides (REO). These resources are spread across several states such as Odisha, Kerala, Andhra Pradesh, Tamil Nadu, West Bengal, Gujarat, Maharashtra, and Jharkhand, mainly found in coastal sands, red (teri) sands, and inland alluvial regions. In addition, about 1.29 million tonnes of REO resources have been identified in hard-rock areas of Gujarat and Rajasthan. The Geological Survey of India (GSI) has further strengthened this resource base by identifying 482.6 million tonnes of rare-earth ore across 34 exploration projects. Altogether, these findings show that India has a strong raw material foundation to build a complete REPM manufacturing ecosystem.
However, despite having such rich resources, India’s domestic production of permanent magnets is still at an early stage. At present, the country depends heavily on imports—mainly from China—which account for nearly 60–80% of the value and 85–90% of the quantity of demand between 2022 and 2025. With the demand for these magnets expected to double by 2030 due to the rapid growth of electric vehicles, renewable energy, electronics, and defence sectors, it has become very important for India to invest more in this sector. Expanding domestic production will help reduce dependence on imports and ensure long-term self-reliance in these critical materials.
Budget Push for Rare Earth Manufacturing and Corridors
The Union Budget 2026–27 focuses strongly on making India self-reliant in critical materials. It supports the recently approved Rare Earth Permanent Magnet (REPM) Manufacturing Scheme and introduces new corridor-based initiatives. Together, these steps aim to build strong domestic capabilities, reduce dependence on imports, and help India become a global leader in advanced materials.
REPM Manufacturing Scheme
To boost self-reliance in critical materials, the government approved a major scheme for Rare Earth Permanent Magnets (REPMs) on 26th November 2025. This scheme provides financial support and incentives to develop a complete domestic manufacturing ecosystem.
- Financial Outlay: ₹7,280 crore
- Capacity Creation: 6,000 MTPA (metric tonnes per annum) of integrated manufacturing capacity for sintered REPMs, to be set up by up to five selected companies through global competitive bidding
- Incentives: ₹6,450 crore will be given as sales-linked incentives over five years
- Capital Subsidy: ₹750 crore to support setting up advanced manufacturing facilities
- Timeline: 2 years for setting up the facilities, followed by 5 years of incentives based on production
- Objective: To create a complete ecosystem—from rare-earth oxides to finished magnets—and ensure supply for key sectors like electric vehicles, renewable energy, electronics, aerospace, and defence
Union Budget 2026–27: Rare Earth Corridors
To support the REPM scheme, the Union Budget 2026–27 has announced Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These corridors will focus on the entire value chain—mining, processing, research, and manufacturing—by using the mineral-rich resources of these states. This initiative is expected to strengthen local economies, improve research and development, and help India become more integrated into global advanced materials value chains.
These corridors also build on the existing presence of IREL (India) Limited in Odisha and Kerala.
IREL (India) Limited, earlier known as Indian Rare Earths Limited, has been functioning under the Department of Atomic Energy since 1963. It has a processing capacity of 10 lakh tonnes per year and produces important minerals like ilmenite, rutile, zircon, sillimanite, and garnet.
IREL also operates a Rare Earth Extraction Plant in Odisha and a Rare Earth Refining Unit at Aluva in Kerala. These facilities match well with the new corridor plan. By linking IREL’s existing infrastructure with these corridors, the government aims to increase domestic rare earth production, promote advanced manufacturing, and speed up India’s move towards self-reliance and clean energy.
Rare Earth Development Aligned with National Goals
ndia’s recent policy measures reflect how rare earth development is being aligned with broader national priorities. The focus is not only on industrial growth but also on clean energy, defence, and strategic resource security.
- Self‑Reliance (Atmanirbhar Bharat): By reducing dependence on imports, where 60–80% of the value and 85–90% of quantity of permanent magnets were sourced from China between 2022–25, India aims to strengthen its domestic capability and secure critical supply chains.
- Clean Energy Transition: Rare earth magnets are essential for electric vehicle motors and wind turbine generators, both central to India’s renewable energy expansion and its Net Zero 2070 vision. The corridors announced in the Union Budget will ensure that mineral-rich states directly contribute to this transition.
- National Security and Defence: Rare earth magnets are vital for aerospace systems, defence equipment, and precision sensors. Domestic corridors and manufacturing capacity ensure secure access for strategic applications, reducing vulnerability to global supply chain disruptions.
- Policy and Institutional Reforms: These initiatives complement reforms under the Mines and Minerals (Development and Regulation) Act (MMDR Act, amended in 2023), which introduced a dedicated list of critical minerals and opened exploration and mining to private participation. They also align with the National Critical Minerals Mission (NCMM, approved in January 2025), which aims to secure sustainable supply chains for rare earths and other strategic minerals.
Strengthening Global Mineral Partnerships
India’s rare earth and critical minerals strategy is not limited to domestic reforms; it is closely tied to international cooperation to build resilient supply chains.
- Bilateral Agreements
- The Ministry of Mines has entered into agreements with mineral-rich countries such as Australia, Argentina, Zambia, Mozambique, Peru, Zimbabwe, Malawi, and Côte D’Ivoire.
- These partnerships aim to secure long-term access to rare earths and other critical minerals essential for clean energy, advanced mobility, and defence applications.
Multilateral Platforms
- India participates in the Minerals Security Partnership (MSP), a grouping of major economies focused on diversifying and securing global supply chains for critical minerals.
- India is also part of the Indo-Pacific Economic Framework (IPEF), which includes cooperation on clean energy and critical mineral supply chains.
- These platforms provide India with opportunities to collaborate on technology, investment, and sustainable mining practices, reducing the risks of supply disruptions.
Role of Khanij Bidesh India Limited (KABIL)
- KABIL is a joint venture of National Aluminium Company Ltd. (NALCO), Hindustan Copper Ltd. (HCL), and Mineral Exploration & Consultancy Ltd. (MECL) under the Ministry of Mines.
- Its mandate is to acquire and develop overseas mineral assets to strengthen India’s domestic value chains.
- KABIL signed an agreement with CAMYEN in Argentina for the exploration and mining of five lithium brine blocks, marking a significant step in securing overseas critical mineral assets.
Conclusion
India’s rare earth strategy is moving decisively toward self-reliance by combining strong domestic resource potential with targeted policy and financial support. The ₹7,280 crore REPM Manufacturing Scheme and the Union Budget 2026–27 announcement of Dedicated Rare Earth Corridors together create an integrated framework for mining, processing, research, and manufacturing. These measures reduce import dependence, strengthen clean energy and defence supply chains, and align with national priorities of Atmanirbhar Bharat, Net Zero 2070, and Viksit Bharat @2047. Complementary international partnerships and institutional reforms further ensure resilient access to critical minerals. With coordinated domestic and global initiatives, India is positioning itself as a reliable and competitive player in advanced materials value chains.
