Budget Rare Earth Corridor Boost: Critical Minerals In Andhra Pradesh, Kerala, Odisha, Tamil Nadu

Last Updated:February 02, 2026, 13:12 IST

Budget 2026 Announces Rare Earth Corridors: Which are the four states? Which rare earth minerals do they have? What are rare earth minerals used for?

A scheme for Rare Earth Permanent Magnets was launched in November 2025. (AI generated for representation)

Budget 2026 Announces Rare Earth Corridors: Mapping ‘The Vitamins Of Modern Industry’ In 4 States

Support for dedicated rare earth corridors in four states was among the key announcements made in Union Finance Minister Nirmala Sitharaman’s Budget speech on Sunday.

Which are the four states? Which rare earth minerals do they have?

The Budget 2026 announcement

A scheme for Rare Earth Permanent Magnets was launched in November 2025.

“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," said Finance Minister Nirmala Sitharaman, who presented her ninth consecutive Budget, said in her speech.

What are rare earth elements?

Rare Earth Elements (REEs) are a group of 17 metallic elements comprising the 15 lanthanides on the periodic table, plus scandium and yttrium. Despite their name, they are relatively abundant in the Earth’s crust; for instance, cerium is as common as copper. They are considered “rare" because they are seldom found in concentrated, economically mineable deposits and are difficult to chemically separate from one another.

Why are they called ‘Vitamins of Modern Industry’?

Rare earth elements are often called the ‘Vitamins of Modern Industry’ because even small amounts significantly enhance the performance of high-tech devices. Their importance stems from unique magnetic, luminescent, and electrochemical properties.

Clean Energy & Green Tech: They are essential for the transition to a low-carbon economy. Neodymium and dysprosium are used to create powerful permanent magnets for electric vehicle (EV) motors and wind turbines.

Consumer Electronics: REEs power the technology in your pocket. They are used in smartphone speakers, vibration units, and screens (yttrium and europium provide the red and blue colors). They are also critical for computer hard drives and LED lighting.

National Defence: They are vital for advanced military hardware, including precision-guided missiles, radar systems, sonar, and jet engines.

Medical Technology: REEs enable advanced imaging and treatment, such as MRI contrast agents, PET scanners, and medical lasers used in surgery and cancer treatment.

Industrial Applications: They act as catalysts in petroleum refining and are used to create high-strength, corrosion-resistant metal alloys.

Rare earth minerals and the world

Because there are currently no known equal substitutes for many of their applications, REEs are considered critical minerals. China currently dominates the global market, controlling approximately 70% of production and over 85% of refining capacity. This has led countries like the US, India, and the EU to invest heavily in diversifying supply chains to avoid geopolitical risks.

How many rare earth mineral resources do these four states have?

Odisha, Kerala, Andhra Pradesh, and Tamil Nadu are the primary hubs for rare earth minerals in India, primarily due to their extensive coastal monazite deposits. Monazite is a mineral that contains several rare earth elements, notably the lanthanide group.

Monazite is a reddish-brown phosphate mineral, typically found in igneous and metamorphic rocks or as heavy grains in placer deposits, serving as a primary ore for rare-earth elements (cerium, lanthanum, neodymium) and radioactive thorium.

The distribution of monazite resources across these four states is as follows:

Andhra Pradesh: Holds the largest share with 3.78 million tonnes of monazite across 24 deposits. Visakhapatnam is the most significant hub for rare earth magnets in India.

The Rare Earth Permanent Magnet (REPM) Plant at the Bhabha Atomic Research Centre (BARC) campus in Visakhapatnam is the country’s first dedicated facility. It produces samarium-cobalt (SmCo) and neodymium-iron-boron (NdFeB) magnets using indigenous technology and domestic raw materials. Andhra Pradesh is moving beyond mining into value-added downstream processing and magnet manufacturing.

Odisha: Contains 3.16 million tonnes of monazite, located in 12 major deposits such as those in Gopalpur and Chhatrapur. Odisha is focused on developing new technologies for magnets used in defense, space, and EVs.

Tamil Nadu: Has 2.47 million tonnes of monazite reserves spread across 50 deposits, including the Manavalakurichi beach sand and Sathankulam Teri sand deposits. Home to significant monazite resources, now being developed for an end-to-end magnet value chain.

Kerala: Holds 1.84 million tonnes of monazite in 35 deposits, with significant concentration in areas like the Chavara barrier beach. The state is utilising its extensive beach sand mineral deposits to support refined rare earth extraction and magnet production.

Other schemes

Midwest Advanced Materials (MAM) is establishing a Neodymium-Iron-Boron (NdFeB) magnet production plant in Hyderabad, supported by the Technology Development Board.

Earlier in November 2025, the Union Cabinet had approved ‘Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets’ with a financial outlay of Rs 7,280 crore.

This first-of-its-kind initiative is aimed to establish 6,000 Metric Tons per Annum (MTPA) of integrated Rare Earth Permanent Magnet (REPM) manufacturing in India, thereby enhancing self-reliance and positioning India as a key player in the global REPM market.

REPMs are one of the strongest types of permanent magnets and are vital for electric vehicles, renewable energy, electronics, aerospace, and defence applications.

How has industry reacted to the scheme?

Budget proposals on dedicated rare earth corridors in mineral-rich states like Odisha will spur the development of new technologies for manufacturing of rare earth magnets used in phones, defence, EVs and other modern equipment, industry players said on Sunday.

“Today’s budget highlighted on creating Rare Earth Corridors in Odisha, Tamil Nadu, Kerala & Andhra Pradesh for mining, manufacturing, processing and refining of rare earth and critical minerals. This will lead to enhanced focus and development of new technologies for manufacturing of Rare Earth Magnets to be used in phones, defence & space equivalents, EVs and other modern equipment," Sanjiv Ganeriwala, Chairman of Mining Council Eastern India, Assocham, said.

Also, beneficiation and refining of graphite will lead to large battery storage for solar energy and a lot of other industries. A lot of other rare and critical minerals beneficiation and refining will make India self-reliant and a leader in the world, he said.

Grant Thornton Bharat Partner and Metals and Mining Industry Suvendu Bose said that the proposed dedicated rare earth corridors aim to integrate mining, processing, R&D, and manufacturing, addressing the weakest link in India’s energy transition: value-chain depth.

Complemented by customs duty exemptions for capital goods in critical minerals processing, nuclear projects, lithium-ion cells and battery storage systems, and solar glass manufacturing, these measures advance India’s strategic self-reliance in minerals and chemicals crucial for EVs, renewables, nuclear power, defence, and advanced manufacturing, Bose said.

With Agency Inputs

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