Budget 2026: India Plans Rare-Earth Corridors for Aatmanirbharta

In order to lessen the reliance on Rare Earth Elements (REE) being imported into India from other countries, the government of India has decided to establish dedicated REE corridors located in four mineral-rich states within India (Odisha, Kerala, Andhra Pradesh, and Tamil Nadu).

The purpose of these REE corridors is to promote India's mining, processing, research, and manufacturing experiences all associated with critical minerals.

Finance Minister Nirmala Sitharaman highlighted the challenges posed by the global trade environment, emphasizing that access to resources and supply chains is increasingly disrupted. She noted, “New technologies are transforming production systems while sharply increasing demands on water, energy, and critical minerals.” 

In line with India’s push for self-reliance, these corridors will help secure supply chains for rare earth permanent magnets (REPM), which are essential for industries such as electric vehicles, renewable energy, electronics, aerospace, and defense.

Madhumita Agrawal, Founder & CEO of Oben Electric, welcomed the move, stating, "The Union Budget’s focus on expanding the Rare Earth Permanent Magnet Scheme and building dedicated rare earth corridors is a positive step towards reducing import dependence for critical materials used in EV manufacturing. Rare earth magnets, which are key components in electric motors, benefit directly from this initiative, and strengthening capabilities across mining, processing and advanced manufacturing will create a more reliable domestic supply base."

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The push for these corridors follows the global shortage of REPM caused by China, the world’s largest supplier, curbing exports. While Chinese exports have resumed, the incident highlighted the urgency of indigenization. Heavy Industries Minister H.D. Kumaraswamy stated, “Rare earth corridors will significantly strengthen domestic capabilities and reduce import dependence,” positioning India as a global hub for sustainable, high-value manufacturing.

Rajesh Doshi, Director and Co-Founder at Zebronics, also echoed the importance of the budget measures, saying, “The Union Budget 2026 sends a strong and timely signal towards strengthening India’s electronics manufacturing backbone in line with the Viksit Bharat vision. The emphasis on empowering MSMEs, developing rare-earth and component supply corridors, and reinforcing core manufacturing capabilities will be crucial in building resilient domestic ecosystems.”

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The government of India has also proposed eliminating the customs duties currently existent on Monazite (one of the three basic types of REEs) to aid in producing high-end magnets used in electric motorbikes manufactured in India. Finally, a special-thru tax incentive will be given to companies undertaking the prospecting and exploration of these critical minerals; this incentive will promote innovation and job growth within the industry.

With electric motorcycle production increasing in India, these proposed initiatives will be critical to manufacturers that have developed and manufactured their entire supply chain from their own facilities; this will also support long-term, stable supply solutions when sourcing critical minerals to manufacture their end-products in India.