Sitharaman said the government will actively support these states in building integrated rare earth value chains, recognising their importance in securing supply of critical materials needed for clean energy, electronics, defence and high-tech manufacturing
Nirmala Sitharaman. Pic/PTI
In a major strategic push to strengthen India’s critical minerals and advanced manufacturing ecosystem, Finance Minister Nirmala Sitharaman on Sunday announced the creation of dedicated rare earth corridors in mineral-rich states including Odisha, Kerala, Andhra Pradesh and Tamil Nadu, as part of the Union Budget 2026.
Move aims to build integrated value chains for strategic minerals
Presenting her record ninth consecutive Union Budget in Parliament, Sitharaman said the government will actively support these states in building integrated rare earth value chains, recognising their importance in securing supply of critical materials needed for clean energy, electronics, defence and high-tech manufacturing.
“We now propose to support mineral-rich states such as Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated rare earth corridors,” the Finance Minister said, underlining the government’s focus on reducing import dependence and strengthening domestic capabilities in strategic minerals.
Rare earth magnet scheme launched last year gets fresh momentum
The announcement builds on steps already taken by the government last year. In November 2025, a scheme for rare earth permanent magnets was launched. Under this, the Centre approved the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPM) with a financial outlay of Rs 7,280 crore. The scheme aims to create an integrated manufacturing capacity of 6,000 metric tonnes per annum, covering the entire value chain—from rare earth oxides to finished permanent magnets.
High-tech tool rooms, infra equipment manufacturing proposed
To further expand India’s rare earth and advanced manufacturing capacity, Sitharaman proposed the establishment of high-tech tool rooms by central public sector enterprises at two locations. These facilities will function as digitally enabled automation service bureaus, capable of designing, testing and producing high-precision components locally, at scale and at lower cost.
The Finance Minister also announced that a new scheme would be introduced to enhance construction and infrastructure equipment manufacturing, aimed at strengthening domestic production of high-value and technologically advanced construction and infrastructure equipment.
Electronics, semiconductors key pillars of advanced manufacturing push
In another significant push to the electronics sector, Sitharaman proposed an allocation of Rs 40,000 crore for electronics components manufacturing, signalling the government’s intent to deepen value addition within the country.
Highlighting progress in the semiconductor sector, she said India’s Semiconductor Mission 1.0 has significantly expanded the country’s capabilities. Building on that foundation, the government will now roll out Semiconductor Mission 2.0, which will focus on manufacturing equipment and materials, developing full-stack Indian intellectual property, and strengthening semiconductor supply chains.
Earlier this week, Sitharaman had tabled the Economic Survey of India for 2025–26 in Parliament. The Survey projects India’s real GDP growth for 2026–27 in the range of 6.8 to 7.2 per cent, reflecting strong medium-term growth potential despite global economic challenges.
The Survey also noted that India recorded its lowest inflation rate since the beginning of the CPI series, with average headline inflation at 1.7 per cent during April–December 2025, supported by easing food and fuel prices. The inflation outlook, it said, remains benign due to favourable supply-side conditions and the gradual impact of GST rate rationalisation.
Together, the proposed rare earth corridors, semiconductor initiatives and electronics manufacturing push underline the government’s strategy to position India as a global hub for critical minerals and advanced technologies.
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