India’s Finance Ministry has unveiled a budget proposal for the current financial year that will boost domestic rare earths mining and the clean energy sector as part of a broader effort to break global supply chain monopolies—particularly China’s dominance—and achieve strategic self-reliance in critical minerals.In the Union Budget 2026-27 presented over the weekend, Finance Minister Nirmala Sitharaman unveiled a strategic initiative to establish dedicated rare earth corridors across four mineral-rich coastal states of Odisha, Kerala, Andhra Pradesh and Tamil Nadu. These corridors will act as integrated zones connecting mines, processing units, research labs, and factories to streamline the movement and production of rare earth elements (REEs).
The initiative builds on the ?7,280 crore scheme ($800 million) approved in late 2025 to promote the manufacturing of Sintered Rare Earth Permanent Magnets (REPM). This scheme targets an annual production capacity of 6,000 metric tonnes. India plans to leverage its substantial reserves (estimated at 8.52 million tonnes) of REEs found in monazite-rich beach sands along its coasts.
The budget will also extend tax incentives, including full exemptions, for critical mineral processing. REEs are essential for high-tech industries including electric vehicles (EVs), wind turbines, semiconductors, defense electronics and smartphones. In Kerala alone, the corridor is expected to attract ?42,000 crore ($4.6 billion) in investments and generate approximately 50,000 jobs. The REPM scheme spans seven years, including a two-year gestation period for setting up facilities and five years for sales-linked incentives. Up to five beneficiaries will be selected through a global competitive bidding process to ensure high-tech standards and competitiveness.“By identifying, exploring, and processing rare earth minerals domestically, India aims to reduce its dependence on external sources,” Civil Aviation Minister Ram Mohan Naidu said.
Beyond minerals, the Indian government has announced a massive, multi-pronged push to develop the renewable energy sector, with total allocations and targeted investments exceeding ?87,000 crore ($9.6 billion) across different initiatives, including power generation and nuclear energy.
The Ministry of New & Renewable Energy (MNRE) budgetary allocation was ?32,914.7 crore ($3.7 billion) representing a nearly 30% increase from the revised estimates of the previous year.PM Surya Ghar: Muft Bijli Yojana received an allocation of ?22,000 crore ($2.4 billion) to accelerate household residential solar adoption while PM-KUSUM (Agri-Solar) was raised to ?5,000 crore ($550 million). PM Surya Ghar: Muft Bijli Yojana is a flagship scheme launched by the Government of India on February 13, 2024, designed to provide up to 300 units of free electricity every month to 10 million households.