The mines and metals sector had approached the Union Budget 2026 with expectations of several policy announcements. Industry participants were looking for measures to support domestic copper production, a clearer framework for rare earths, and fiscal support for enabling capital-intensive investments in steel and aluminium that are aligned with the green transition.
From this broader set of expectations, the Budget placed its emphasis on one area: rare earths.
The sector has been seeking a policy push to develop a domestic ecosystem for rare earth elements, given their growing importance for electric vehicles, electronics, defence, and clean energy technologies. In this context, the government was expected to outline a longer-term approach to securing supply chains for these critical minerals.
Given that rare earth mining and processing involve high capital costs and long gestation periods, the industry had hoped for initial fiscal support for prospecting, exploration, and refining activities.
In her Union Budget 2026 speech, Finance Minister Nirmala Sitharaman announced that the government will support mineral-rich States—Odisha, Kerala, Andhra Pradesh, and Tamil Nadu—in establishing rare earth corridors. These corridors are intended to facilitate mining, processing, research, and manufacturing activities related to critical minerals.
India’s reliance on imports highlights the relevance of these measures. Rare earth imports have risen from $14.1 million in 2014 to $17.5 million in 2024, with over 45% sourced from China. While China holds nearly half of global rare earth reserves, deposits are also found in countries such as Brazil, Australia, and India.
China’s position in the sector is reinforced by its established mining capabilities and research infrastructure, accounting for nearly 92% of global refining capacity and supplying close to 30% of global demand.
India has taken some steps in this direction in recent years.
In November 2025, the government announced a scheme with an outlay of Rs 7,280 crore to support domestic manufacturing of Rare Earth Permanent Magnets (REPM), with a targeted capacity of 6,000 metric tonnes per annum.
The Budget’s focus on rare earth corridors builds on ongoing efforts and reflects a gradual approach to strengthening domestic capabilities.
While the absence of broader fiscal incentives may have tempered near-term expectations, the emphasis on ecosystem development and state-level capacity creation lays the groundwork for deeper reforms.
Over time, sustained policy clarity, timely project execution, and complementary incentives for exploration and refining could help translate this intent into a more competitive domestic rare earth industry.