Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2026 on 1 February, announced the establishment of dedicated rare earth corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu to promote mining, processing, research and manufacturing of critical minerals.
As reported by Financial Express, the rare earth corridors will be established in mineral-rich states, with Kerala and Tamil Nadu highlighted for their coastal sands containing monazite, a source of rare earth elements. The corridors are expected to attract significant investment and create thousands of jobs, while supporting the development of high-tech industries such as electric vehicles, wind turbines, and electronics.
As highlighted by The Hindu, the announcement comes amid global concerns over China’s dominance in rare earth production and processing. India currently imports a substantial portion of its rare earth needs from China, which controls over 90 percent of global processing capacity. The new corridors aim to reduce this dependence and strengthen domestic supply chains for critical minerals.
According to the Financial Express, the government’s support for rare earth corridors follows the launch of a scheme for rare earth permanent magnets in November 2025.
India holds the world’s third-largest reserves of rare earths but contributes less than 1 percent to global production, highlighting the gap between resource potential and actual output.
The budget also includes a Rs 7,280-crore scheme to promote the manufacturing of rare-earth permanent magnets, with incentives for sales and capital subsidies for new facilities as details emerged. This is expected to support the creation of an integrated value chain from mining to finished products within India.
“We now propose to support the mineral-rich states of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to establish dedicated rare earth corridors to promote mining, processing, research and manufacturing,” Finance Minister Nirmala Sitharaman stated in her budget speech.
Moreover, according to Deccan Herald, Sitharaman also introduced a Rs 20,000-crore scheme for carbon capture, utilisation, and storage, targeting sectors such as steel and cement, as part of a broader effort to curb industrial emissions and support India’s climate commitments. The initiative aims to incentivise the adoption of carbon capture technologies across heavy industries.
The carbon capture scheme, with an outlay of Rs 20,000 crore over five years, is intended to accelerate the adoption of clean technologies in industries with high emissions according to official statements. The government expects this to contribute to India’s climate goals and support the transition to a low-carbon economy.
“The government will provide incentives for manufacturing seaplanes in the country as part of efforts to boost tourism,” the Finance Minister also announced, indicating a multi-sectoral approach to economic and environmental policy.
In addition to the rare earth and carbon capture initiatives, the budget outlined plans for high-speed rail corridors and increased public capital expenditure, reflecting a focus on infrastructure and sustainable growth as further updates indicated.
Note: This article is produced using AI-assisted tools and is based on publicly available information. It has been reviewed by The Quint's editorial team before publishing.