Budget 2026: Rare earth corridors proposed as India navigates China’s sectoral dominance

Finance Minister Nirmala Sitharaman announced in her Union Budget 2026 speech that the government will support the mineral-rich States of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu in establishing rare earth corridors to promote the mining, processing, research, and manufacturing of critical minerals.

Finance Minister Nirmala Sitharaman announced in her Union Budget 2026 speech that the government will support the mineral-rich States of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu in establishing rare earth corridors to promote the mining, processing, research, and manufacturing of critical minerals.

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This announcement arrives as China — the dominant force in rare earth production and exports — leverages its mining industry as a strategic bargaining chip in its ongoing tariff war with the U.S. While the U.S. remains the second-largest importer of Chinese rare earths after Japan, India is also heavily dependent on China for these materials.

Chart 1 shows India’s total rare earth imports over the years and China’s share in India’s imports.

As observed from the chart, India’s rare earth imports have been increasing over time from $14.1 million in 2014 to $17.5 million in 2024. Over 45% of these minerals come from China.

China’s dominance in rare earths stems not only from resource availability but more so from its longstanding strength in mining and research capacity. Rare earth elements (REEs), despite the name, are not particularly scarce.