Why Kerala CM Is Wrong In Claiming ‘Centre Wants To Appropriate Minerals’ With Rare Earth Corridor

Last Updated:February 03, 2026, 15:26 IST

Royalty for state to industrial development and jobs, here's why Kerala CM Pinarayi Vijayan is wrong in alleging ‘Rare Earth Corridor’ aims to appropriate state’s mineral wealth

Kerala CM Pinarayi Vijayan has questioned the Budget announcement made by FM Nirmala Sitharaman. (PTI File)

Finance Minister Nirmala Sitharaman, in the Budget 2026 presented on Sunday, announced dedicated rare earth corridors for four states – Odisha, Kerala, Andhra Pradesh and Tamil Nadu.

Kerala CM Pinarayi Vijayan, however, reacted to it, alleging the Centre’s ‘Rare Earth Corridor’ aims to appropriate the state’s mineral wealth. Here’s why he is wrong.

What the FM announced in Budget 2026

“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 FM Sitharaman.

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

What Pinarayi Vijayan said

Vijayan on Sunday criticised the Union Budget 2026, terming it a “blatant declaration of hostility" toward the state. “The Union Budget 2026 presented by @nsitharaman is a blatant declaration of hostility toward Kerala. By ignoring our demands for AIIMS and railway corridors, the @FinMinIndia has erased Kerala from the map. This budget abandons the common man for corporate greed. Slashing MGNREGS funds and pushing for private mining via ‘rare earth corridors’ is a nefarious strike against our sovereignty and federal values. Kerala will not stay silent against this neglect," he posted on X.

In a statement, Vijayan said, “The Centre’s move to seize Kerala’s mineral resources is extremely dangerous. The budget announcement indicates a policy that opens the way for private corporate mining. By scrapping even the strict norms of the Ministry of Environment, the Centre is fast-tracking environmental clearances to benefit private entities. The Kerala government had announced in the state budget that a mineral corridor linking Vizhinjam, Chavara, and Kochi would be established in the public sector. The Centre’s move to hand over mineral resources to private corporations runs counter to the state’s policy and is harmful. This budget further proves how both the Congress and the BJP governments have deceived Kerala with false promises, including on the Railway Coach Factory."

What the Centre plans to actually do with rare earth minerals

To strengthen India’s self-reliance in critical materials, the government on November 26, 2025, approved a major scheme for Rare Earth Permanent Magnets (REPMs). This initiative provides financial support and incentives to build a fully integrated domestic manufacturing ecosystem.

Financial Outlay: ₹7,280 crore

Capacity Creation: 6,000 MTPA integrated manufacturing capacity of sintered REPMs, distributed among up to five beneficiaries through global competitive bidding

Incentives: ₹6,450 crore in sales-linked incentives over five years

Capital Subsidy: ₹750 crore to support advanced facilities

Timeline: Two-year gestation for setup, followed by five years of incentive disbursement linked to production

Objective: Establish an end-to-end ecosystem from rare‑earth oxides to finished magnets, ensuring supply for sectors like electric mobility, renewable energy, electronics, aerospace, and defence.

What will a rare earth corridor do? Will it appropriate minerals?

To complement the REPM scheme, the Union Budget 2026–27 announced Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These corridors will focus on mining, processing, research, and manufacturing, leveraging the mineral-rich base of these states. The initiative is expected to generate stronger local economies, enhance R&D capacity, and integrate India more deeply into global advanced‑materials value chains.

These corridors directly complement the existing presence of IREL (India) Limited in Odisha and Kerala.

IREL (India) Limited, formerly Indian Rare Earths Limited, has been operating under the Department of Atomic Energy since 1963. With a processing capacity of 10 lakh tonnes per annum, it produces strategic minerals such as ilmenite, rutile, zircon, sillimanite, and garnet. Importantly, IREL runs a Rare Earth Extraction Plant in Odisha and a Rare Earth Refining Unit at Aluva in Kerala, both of which align with the corridor initiative. By integrating IREL’s established facilities with the new corridors, the government aims to expand domestic rare earth capacity, foster advanced manufacturing, and accelerate India’s transition toward self-reliance and clean energy.

Will it help Kerala?

State to earn royalty: A July 2024 Supreme Court of India ruling established that states have the power to levy taxes on mineral-bearing land and, along with the Centre, control mineral rights. While the Centre sets royalty rates for major minerals under the MMDR Act, 1957, the states are recognised as owners of the minerals and entitled to collect these royalties.

Will lead to industrial development and jobs: The corridor will need new infrastructure and raw-material processing and other associated activities will need skilled people.

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