Budget 2026: Rare earth corridors could make India ‘self-reliant’ in magnets, say experts

Finance Minister Nirmala Sitharaman in her Union Budget 2026 speech on February 1 proposed 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.

India’s demand for rare earth magnets has grown to 4,000 tonnes in 2025 and is projected to reach 15,000 tonnes by 2030. Despite holding 7% of the world’s resources, India still imports more than 90% of its rare earth magnets, primarily from China, which dominates the global supply chain.

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China, which accounts for about 92% of the world’s rare earth refining and roughly 98% of global magnet production, imposed curbs on rare earth exports to India from April 2025, causing supply chain concerns for India's electric vehicle makers. Rare earth magnets are used in traction motors of EVs.

Anish Shah, Group CEO & MD, Mahindra Group, says initiatives to promote critical minerals, rare earth corridors and enhanced electronics and capital goods manufacturing are forward-looking and essential for a resilient industrial ecosystem that can thrive amid global uncertainties.

The integration of dedicated rare earth corridors in four states will catalyse local processing, ensuring the raw materials needed for high-tech manufacturing are readily available, says Hemal Thakkar, Director, Crisil Intelligence. “Beyond economic stability, this initiative provides a shot in the arm for the automotive industry, paving the way for a self-reliant manufacturing future,” Thakkar adds.

Stéphane Deblaise, CEO, Renault Group India, says the targeted push to reduce critical import dependencies, through initiatives on rare earth magnets and continued customs duty exemptions on capital goods for lithium-ion cells, creates confidence for deeper localisation and sustainable mobility.

Agrees, Raju Kumar, Partner and Energy Tax Leader, EY India. “The establishment of Rare Earth Corridors in Odisha, Andhra Pradesh, Kerala and Tamil Nadu, alongside customs-duty exemptions for capital goods used in critical-mineral processing, directly addresses input security for renewables, storage and electric mobility,” says Kumar.

To boost self-reliance in rare earth magnets, the Union Cabinet approved the 'Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets' with a financial outlay of Rs 7,280 crore in November 2025. The initiative aims 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 rare earth magnet market.