Union Budget 2026: What Is Rare Earth Corridor Announced By Nirmala Sitharaman In Her Budget Speech? These Four Mineral-Rich States To Establish Critical Facilities

Rare Earth Corridors to Boost Domestic Manufacturing

Finance Minister Nirmala Sitharaman has proposed supporting mineral-rich states such as Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to establish dedicated rare earth corridors. Earlier, in November 2025, the government launched the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnet (REPM) with a financial outlay of Rs 7,280 crore. The scheme targets 6,000 metric tonnes per annum (MTPA) of integrated REPM manufacturing capacity in India, covering the complete value chain from rare-earth oxides to finished magnets.

“We now propose to support the mineral-rich states of Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated rare earth corridors,” announced Sitharaman while presenting the Union Budget for 2026-27. To enhance the current rare earth capacity, she proposed establishing high-tech tool rooms by central public sector enterprises at two locations, designed as digitally enabled automation service bureaus.

These facilities will locally design, test, and manufacture high-precision components at scale and lower cost. Additionally, she proposed a scheme to upgrade construction and infrastructure equipment (CIE), strengthening domestic manufacturing of high-value and technologically advanced machinery.

Semiconductor Mission 2.0 and Economic Outlook

The Finance Minister also announced an allocation of Rs 40,000 crore for electronics components manufacturing. She noted that “India’s Semiconductor Mission 1.0 expanded the country’s semiconductor capabilities. Building on this, the government will now launch Semiconductor Mission 2.0 to produce equipment and materials, develop full-stack Indian IP, and strengthen supply chains.”

Sitharaman presented her record ninth consecutive Union Budget along with the Economic Survey of India for 2025-26, offering a comprehensive review of the economy.

The Survey projected real GDP growth of 6.8-7.2% for 2026-27 and highlighted a low inflation rate, with April–December 2025 average headline inflation at 1.7%. This reflects a disinflationary trend in food and fuel prices, with the outlook remaining benign due to favorable supply-side conditions and gradual GST rate rationalization.

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