India has committed over $10 billion to bolster its rare earth sector, aiming to diminish dependence on China for these vital minerals.

The Ministry of Finance unveiled this ambitious strategy in the Union Budget 2026-27, targeting enhancements in rare earth mining alongside accelerated clean energy development. This forms part of a wider effort to safeguard India's access to critical resources amid volatile global supply chains.

Finance Minister Nirmala Sitharaman highlighted the establishment of specialised rare earth corridors across four coastal states: Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.

These integrated hubs will connect mining operations, processing plants, research facilities, and manufacturing units to streamline the extraction and refinement of rare earth elements (REEs). Such corridors promise to transform coastal monazite-rich sands into economic powerhouses.

This initiative builds on a ₹7,280 crore ($800 million) scheme approved in late 2025 for domestic production of Sintered Rare Earth Permanent Magnets (REPM). The plan seeks an annual output of 6,000 metric tonnes, leveraging India's estimated reserves of 8.52 million tonnes of REEs. These magnets are indispensable for high-tech applications, underscoring the strategic urgency of self-reliance.

To lure investments, the budget offers sweeping tax incentives, including full exemptions for critical mineral processing. Rare earths underpin key sectors like electric vehicles, wind turbines, semiconductors, defence electronics, and smartphones. In Kerala, the corridor alone is expected to draw ₹42,000 crore ($4.6 billion) in investments, generating approximately 50,000 jobs.

The REPM programme spans seven years, with the initial two devoted to infrastructure setup and the remaining five to performance-linked incentives. Up to five global participants will be selected via a competitive process, prioritising technological prowess and market viability. Civil Aviation Minister Ram Mohan Naidu emphasised that domestic exploration and processing will curb import vulnerabilities.

Parallel to rare earths, the government has earmarked over ₹87,000 crore ($9.6 billion) for renewable energy expansion, encompassing power generation and nuclear advancements. The Ministry of New & Renewable Energy (MNRE) secured ₹32,914.7 crore ($3.7 billion), a 30% rise from last year's revised estimates, signalling robust commitment.

A flagship allocation of ₹22,000 crore ($2.4 billion) supports the PM Surya Ghar: Muft Bijli Yojana, launched on 13 February 2024. This scheme promises up to 300 units of free monthly electricity to 10 million households, fostering rooftop solar adoption. With a total outlay of ₹75,021 crore ($8.2 billion), it aims to slash 720 million tonnes of carbon emissions over 25 years.

Complementing this, the PM-KUSUM (Agri-Solar) initiative receives ₹5,000 crore ($550 million). Introduced in 2019, it provides up to 60% subsidies for farmers to deploy solar pumps, modernise grid-connected pumps, and establish solar plants on fallow land. These measures seek to elevate farmer incomes, reduce diesel consumption, and fortify energy security.

The budget introduces a ₹20,000 crore ($2.2 billion) five-year plan for Carbon Capture, Utilisation, and Storage (CCUS). Targeted at decarbonising steel, cement, and power industries, it aligns with India's net-zero ambitions by 2070. This reflects a pragmatic approach to balancing industrial growth with environmental imperatives.

Nuclear energy receives a significant thrust, with the Department of Atomic Energy allocated ₹24,124 crore ($2.7 billion). Research and development funding for the Bhabha Atomic Research Centre (BARC) has nearly doubled to ₹1,800 crore ($198 million). Tax incentives further expedite infrastructure, including extended customs duty exemptions for nuclear imports until 2035, now applicable to all plant sizes.

The Nuclear Energy Mission prioritises Small Modular Reactors (SMRs) and 'Bharat Small Reactors' (BSRs), with plans to commission at least five indigenous SMRs by 2033. Retired coal plant sites may be repurposed for nuclear facilities, optimising land use. Capacity targets include 22 GW by 2032, 47 GW by 2037, 67 GW by 2042, and 100 GW by 2047.

India's civil nuclear ties with Russia remain pivotal, centred on the Kudankulam Nuclear Power Plant (KKNPP) in Tamil Nadu. Russia is building six 1,000 MW reactors and providing fuel, with the first two units already operational. As India's primary nuclear fuel supplier, this partnership bolsters long-term energy security.

These investments position India as a formidable player in critical minerals and clean energy, fostering economic resilience, job creation, and technological sovereignty.

IDN (With Agency Inputs)