By Zarak Khan | 2026-02-18

India has announced plans to establish dedicated "rare earth corridors" to strengthen its critical mineral supply chain. The initiative aims to curb China's global dominance and reduce New Delhi's long-standing reliance on Beijing for key industrial inputs.

The move, unveiled in early February alongside the Union Budget 2026–27, reflects India's growing urgency to secure access to strategic resources essential for advanced manufacturing, clean energy technologies and national defense.

Finance Minister Nirmala Sitharaman told parliament on February 1 that the government would develop these corridors to "strengthen India's domestic manufacturing base and reduce dependence on imports of critical minerals."

Building capacity

"Today, we face an external environment in which trade and multilateralism are imperiled. And access to resources and supply chains [is] disrupted," she said during her budget speech, highlighting the uncertain geopolitical environment.

Under the detailed plan released on February 3, the Indian government said that it would establish rare earth corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu.

Boasting significant mineral reserves, these states will serve as hubs for mining, processing, research and manufacturing.

Officials described the corridors as a comprehensive framework designed to harness India's mineral-rich base while creating an integrated ecosystem for value-added production.

The corridors will complement India's recently approved Rare Earth Permanent Magnet (REPM) manufacturing scheme, which received a budgetary allocation of 72.8 billion INR ($875 million) in November.

Challenging China

Rare earth permanent magnets are indispensable for advanced engineering applications, including electric vehicle motors, wind turbine generators, consumer electronics, aerospace systems, defense equipment and precision sensors.

The Indian initiative comes against the backdrop of China's decades-long dominance in rare earth elements.

While these minerals are not geologically scarce, their processing is notoriously complex, environmentally damaging and expensive.

Beijing has leveraged its control over mining and refining capacity to maintain a near-monopoly in global supply chains, turning its foreign buyers into virtual hostages.

Since April, China has tightened controls over several rare earth materials. It has introduced export licensing requirements for select products and technologies.

In October, China's Commerce Ministry announced new licensing requirements for rare earth-related technologies, including for overseas entities. It cited "safeguarding national security and interests."

China intends to add five more elements, including holmium, erbium, thulium, europium and ytterbium, to its licensing regime.

Indian officials have increasingly characterized China's market dominance as a strategic vulnerability for India.

Between 2022 and 2025, India imported between 85% and 90% of its REPM requirements from China, government data indicate, underlining the scale of dependence.

To curb reliance on imports, India has set a target of achieving domestic production capacity of 6,000 metric tons of rare earth permanent magnets annually.

Fiscal incentives

As part of this push, the government is proposing incentives, including the elimination of customs duties on imported monazite sand, a key input for permanent magnet production, Bloomberg reported February 1, citing the budget document.

The plan theoretically would incentivize Indian industry to process monazite.

Such rising companies in turn could then process India's estimated 13.15 million tons of monazite reserves, which contain 7.23 million tons of rare earth oxides and comprise a significant domestic resource base.

Alongside industrial measures, New Delhi has established institutional mechanisms such as the National Critical Mineral Stockpile (NCMS) and the National Critical Minerals Mission (NCMM), aimed at insulating the country from supply shocks and reclaiming autonomy in critical technology supply lines.

Rishabh Jain, a fellow at the New Delhi-based Council on Energy, Environment and Water, said the initiative signals "a pivotal shift from national policies and regulatory reforms to state-level execution via local value add," building on the NCMM and a recent magnet production scheme.

"By anchoring supply chains in mineral-rich states we are finally bridging the critical gap between upstream mining and downstream manufacturing," Jain told the Hindustan Times for a February 1 article.

Global partnerships

India's rare earth strategy reflects its recognition of its "extreme dependence on China" and the need to diversify supply chains. It has sought to align with other countries chafing at China's control of critical minerals.

New Delhi is seeking technology transfers, investment and partnerships with major economies such as the United Kingdom, the European Union and Japan.

Moreover, India is part of the Minerals Security Partnership, a US-led coalition of 14 countries aimed at catalyzing public and private investment in resilient critical mineral supply chains.