Union Budget 2026: Rare-earth corridors get thumbs-up, but experts warn execution needs Centre–State alignment

Finance Minister Nirmala Sitharaman, while presenting the Budget 2026, highlighted India’s focus on strengthening strategic sectors, including rare earth minerals, which are crucial for manufacturing, defence, and emerging technologies. The Budget proposes establishing rare-earth corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to promote mining, processing, research, and downstream manufacturing.

Commenting on the announcement, Ashish Suman, Partner at JSA Advocates & Solicitors, said, “The Budget underscores India’s commitment to manufacturing by focusing on productivity, capacity building, and resilience amid global volatility, while advancing the vision of Sabka Saath, Sabka Vikas. Rare earth mineral corridors aim to strengthen India’s global position, boost employment, and attract private investment. A PPP-led market-building approach, rather than just transactional projects, is the right step forward.”

However, experts note that operationalising these corridors requires coordinated reforms. Vishnu Sudarsan, Partner at JSA Advocates and Solicitors, outlined four key areas for legal and policy intervention:

• Monazite and Beach Sand Minerals: These should be removed from the purview of the Atomic Energy Act, while private and joint ventures are allowed to mine and process under strict licensing and radiation controls, with government custody of thorium by-products.
• MMDR Act Updates: A new chapter on “critical and strategic minerals” is needed, offering longer tenures, accelerated allocations, and royalty structures that reward downstream processing over raw extraction.
• CRZ and EIA Reforms: Coastal Regulation Zone and Environmental Impact Assessment rules should recognize rare earth corridors as strategic infrastructure. Controlled coastal mining should be allowed through project-specific approvals, continuous monitoring, and mandatory remediation, balancing environmental protection with strategic security.
• Incentives and Export Policies: SEZ-style incentives, GST and duty rationalisation, and export controls should prioritise domestic processing and magnet manufacturing, discouraging unprocessed mineral exports while promoting value-added products.

Sudarsan added, “Success hinges on coordinated Centre–State efforts to ensure regulatory and operational alignment. This integrated approach will boost investor confidence, secure project viability, and establish India as a global hub for strategic minerals.”