India is advancing a coordinated strategy to develop domestic capabilities in rare earth permanent magnets through a combination of regional infrastructure planning and targeted fiscal incentives announced alongside the Union Budget 2026–27. The measures are aimed at reducing import dependence in critical materials and supporting manufacturing growth in electric mobility, renewable energy, electronics, aerospace, and defence.
The Union Budget 2026–27 announced the creation of Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These corridors are intended to support mining, processing, research, and manufacturing activities across the rare earth value chain, with a focus on creating regionally integrated industrial ecosystems in mineral-rich states. According to a press release issued by the Press Information Bureau on 03 February 2026, the corridor framework is designed to integrate upstream mineral extraction with downstream processing, research, and manufacturing infrastructure.
The corridor initiative complements a Rare Earth Permanent Magnet Manufacturing Scheme approved by the government on 26 November 2025. The scheme has a total financial outlay of INR 72.8 billion and targets the creation of 6,000 tonnes per annum of integrated manufacturing capacity for sintered rare earth permanent magnets. Capacity is to be distributed among up to five beneficiaries through a global competitive bidding process, covering the full value chain from rare earth oxides to finished magnets.
Under the scheme, INR 64.5 billion has been allocated for sales-linked incentives to be disbursed over five years based on actual production, while INR 7.5 billion has been earmarked as capital subsidy to support the establishment of advanced manufacturing facilities. The programme provides for a two-year gestation period for setting up manufacturing units, followed by five years of incentive disbursement linked to production output.
The policy push reflects India’s current reliance on imports for permanent magnets. Between 2022 and 2025, imports accounted for nearly 60 to 80 percent of domestic demand by value and about 85 to 90 percent by quantity, with most supplies sourced from China. Demand for rare earth permanent magnets is expected to rise sharply by 2030, driven by growth in electric vehicles, wind power generation, electronics manufacturing, and defence applications.
India’s resource base underpins the manufacturing strategy. The Geological Survey of India has identified 482.6 million tonnes of rare earth ore resources across 34 exploration projects. In addition, India holds 13.15 million tonnes of monazite resources, estimated to contain around 7.23 million tonnes of rare earth oxides, distributed across coastal beach sands, inland alluvial deposits, and hard-rock areas in several states.
The corridor initiative is expected to build on existing rare earth processing infrastructure in Odisha and Kerala, where public sector facilities are already engaged in mineral processing and refining. By combining fiscal incentives, regional infrastructure development, and expanded exploration, the government aims to establish an end-to-end domestic ecosystem for rare earth permanent magnets, strengthen supply chain security, and integrate India more closely into global advanced materials value chains.