While presenting Budget 2026, Union Finance Minister Nirmala Sitharaman announced the creation of a Rare Earth Corridor. The Finance Minister said that the current global situation is creating many disruptions in the supply chain, and India needs to pay special attention to its supply chain. This will reduce dependence on China. Work on the Rare Earth Corridor will be carried out in the Indian states of Odisha, Kerala, Andhra Pradesh and Tamil Nadu. The objective of this corridor is to create a strong rare earth supply chain. Union Finance Minister Nirmala Sitharaman said that while new technologies are changing the production system, the demand for water, energy and essential minerals has increased. The government is taking this step to reduce import dependence and support clean mobility and battery manufacturing through this corridor.
What are rare earths?
Rare earth is actually a group of minerals which are extensively used in advanced technology and gadgets. After refining, these rare minerals are used in electric vehicles, wind turbines, smartphones, renewable energy, security devices, aerospace and defense, and other advanced electronics.
What is the purpose of Rare Earth Corridor?
The objective of the Rare Earth Corridor is to create a special network for mining, processing and transportation of rare earth minerals within the country. By connecting all the mineral-rich states of India, the government aims to improve the supply chain.
China is the largest supplier of rare earths
China is the largest supplier of rare earths in the world. China had banned the supply of rare earths, which increased the pressure on the global supply chain. However, now exports have started again. But after this obstruction by China, many countries of the world including India have increased their attention on local rare earth resources.
What benefits will India get from the Rare Earth Corridor?
According to industry experts, the Rare Earth Corridor will increase India’s production capacity and reduce its dependence on other countries. This will also increase innovation and employment opportunities in India. Processing of rare earth minerals
Let us understand what is the process of extracting rare earth minerals. First of all, rare earth minerals are detected through geological survey.
Then mining is done to extract these rare earth minerals. These minerals are usually found mixed with rocks.
The rocks are then crushed and ground into powder.
Soil is separated from powder using various technologies.
The minerals are then dissolved in a special chemical solution. It separates rare earth elements.
The rare earth elements are then refined into high-purity forms.
Changes in custom duty and tax
In the Budget, the government has proposed to remove basic custom duty on monazite, which is used to make high-end permanent magnets. This tax is currently 2.5 percent. Additionally, the ₹7,280 crore Rare Earth Permanent Magnet Scheme was launched last November. It was also announced in the budget that relief in custom duty will be given on the import of machinery required for processing rare earth minerals.