India's Rare Earth Strategy To Break China's Grip Presenting the Union Budget 2026 in the Parliament, Union Finance Minister Nirmala Sitharaman emphasized that the government is addressing one of India's most critical dependencies – access to strategic materials dominated by global monopolies.

The Union Budget 2026-2027 points to a clear strategic response to the growing global trade tensions and supply-chain vulnerabilities. Presenting the Union Budget 2026 in the Parliament, Union Finance Minister Nirmala Sitharaman emphasized that the government is addressing one of India's most critical dependencies – access to strategic materials dominated by global monopolies.

A Scheme for Rare Earth Permanent Magnets was launched in November 2025. "We now propose 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," said the minister.

Although India holds the third-largest reserves of rare earths globally, at approximately 6.9 million tonnes, it contributes less than two percent to the global supply chain. Without domestic magnet-making capacity, EVs, wind turbines, and defense sectors will stay exposed to foreign supply risks. The crisis dates back to a few months ago, when China, the world's dominant exporter of rare earth magnets, imposed export restrictions on seven rare earth elements and finished magnets, mandating export licences. This move had nearly shocked the auto industry.

"By establishing dedicated Rare Earth Corridors across mineral-rich states and supporting downstream processing, research, and manufacturing, the government is addressing India's critical dependencies. This initiative not only strengthens domestic capabilities but also provides a significant boost to the mining sector, incentivising exploration, commercial-scale extraction, and integration with downstream industries," said Sanjay Choudhari, chairman, SBL Energy Limited.

"I welcome the Government's keen attention to critical minerals and rare earths. The Rare Earths Corridors for mining, processing, R&D and manufacturing in Odisha, Tamil Nadu, Andhra and Kerala will boost growth, employment and mineral security. Import duty exemption on capital goods for critical minerals processing is very timely in the current global scenario," said Anil Agarwal, Chairman - Vedanta Ltd.

Vedanta has secured 11 critical mineral blocks that include strategically important resources such as nickel, cobalt, copper, graphite, vanadium, tungsten, potash and platinum group elements.

With a strong strategic focus on critical minerals, "Vedanta is committed to strengthening domestic supply chains and reducing India's reliance on imports. The group is actively evaluating and advancing opportunities across the critical minerals value chain, including mineral exploration, resource development and select downstream capabilities, in alignment with the Government's vision for self-reliance in strategic materials," said a Vedanta Limited spokesperson.

A month ago, Adani Chairman, Gautam Adani underscored the strategic importance of critical minerals, arguing that resources such as rare earths, lithium, copper, silicon and uranium underpin both the global clean-energy transition and the rise of advanced technologies.

India's push towards a world-class digital economy, supported by the rapid growth of data centres, is expected to create a long-term surge in demand for critical minerals and energy transition metals.

The announcement on Rare Earth Corridors, marks a pivotal shift from national policies and regulatory reforms to state-level execution via local value addition. It builds on the National Critical Minerals Mission and the recent Magnet Manufacturing Scheme by grounding them in the coastal states.

"By anchoring supply chains in mineral-rich states we are finally bridging the critical gap between upstream mining and downstream manufacturing. Leveraging the existing initiatives such as the Critical Minerals Processing Parks, Stockpiling policy and Center of Excellence under NCMM can increase the pace of the rollout. However, to ensure these corridors succeed, the government must follow up with robust offtake guarantees to secure domestic demand, double down in research and development and facilitate technology transfer from international partners for complex sintering processes by leveraging partnerships with countries like Japan, UK and EU," said Council on Energy, Environment and Water (CEEW) in a statement.

Budget 2026 conveys the government's intention to treat strategic materials and technology as a part of a connected supply-chain. With the proposal to support dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu, the government signals reducing dependence on China for magnets that power EVs, wind turbines and defence platforms.

The opportunity and challenge now lie in execution, which would determine if India's rare-earth security is backed by a circular, resilient materials base.