Against a backdrop of rising geopolitical tensions, fragile provide chains and intensifying competitors for sources, the federal government used the Union Budget 2026-27, which was offered by finance minister Nirmala Sitharaman in the Parliament on February 1, 2026 to sharpen India’s push for strategic self-reliance in minerals, vitality and high-end science infrastructure.
Building on the Rare Earth Permanent Magnets Scheme (REPM) launched final November, the Centre will help mineral-rich states like Odisha, Kerala, Andhra Pradesh and Tamil Nadu in establishing devoted Rare Earth Corridors. These clusters are supposed to combine mining, separation, processing, analysis and manufacturing, lowering India’s dependence on imported uncommon earth worth chains.
Rare earth minerals comprise a bunch of 17 chemically comparable metallic components (15 lanthanides plus scandium and yttrium) essential for high-tech gadgets, clear vitality, and protection, resembling EV magnets and smartphones. Despite their identify, they’re comparatively frequent in the Earth’s crust however are not often discovered in high-concentration, mineable deposits.
With a budgetary outlay of Rs 7,280 crore over seven years, REPM was introduced aiming at lowering import dependence and strengthening home provide chains for electrical mobility, electronics, defence and aerospace, sectors that rely closely on high-performance everlasting magnets. This got here after China, which controls 90 per cent of the worldwide provide chain, imposed restrictions on exports of vital uncommon earth magnets final 12 months.
Under the scheme, India targets to arrange 6,000 tonnes each year (TPA) of REPM manufacturing capability by means of 5 items of 1,200 TPA every, with manufacturing anticipated to start inside two to 3 years. India presently consumes about 4,000-5,000 TPA of everlasting magnets, all of that are imported.
“By supporting domestic mining, processing, research and manufacturing, the government is building resilient supply chains that will be central to India’s clean-tech future,” stated Nitin Gupta, Co-founder & CEO, Attero.
But the Union Budget falls in need of giving a footprint of operationalising such corridors, argued Vishnu Sudarsan, associate at JSA Advocates and Solicitor. “Enhancing, securing and fostering India’s rare earths corridor demands coordinated legal, policy, fiscal, regulatory and administrative efforts. Success hinges on four interlocking reforms,” he stated.
“The Union Budget’s proposals on critical minerals, including duty exemptions for processing equipment and Rare Earth Corridors, points to a growing focus on supply chain security and moving up the value chain,” stated Sehr Raheja, Programme Officer, Centre for Science and Environment (CSE). CSE’s current work on the difficulty has highlighted inexperienced industrialisation and home worth addition as necessary to the vitality transition agenda.
Those 4 reforms, in accordance with Sudarsan, contains:
1. Removing monazite (and seashore sand minerals) from the purview of Atomic Energy Act. Simultaneously, enable personal and joint-venture mining, processing beneath strict licensing and radiation controls, with necessary authorities custody of thorium by-products.
2. Introduction of a brand new chapter to the MMDR Act. The present framework wants a definite vital and strategic minerals class with longer tenures, accelerated allocation, and royalty buildings that reward downstream processing over uncooked extraction.
3. CRZ and EIA guidelines should acknowledge uncommon earth corridors as strategic infrastructure, enabling managed coastal mining by means of project-specific approvals, steady monitoring, and necessary remediation. Environmental safety and strategic safety are usually not contradictory, the legislation should mirror each.
4. SEZ-style incentives, GST and responsibility rationalisation and export controls ought to prioritize home processing and magnet manufacturing. Export controls should discourage unprocessed uncommon earth exports whereas selling value-added merchandise.
“Additionally, reforms require coordinated Centre–State efforts to ensure both the regulatory and operational administration is not working at cross-purposes, be it in terms of land acquisition, community benefit-sharing, taxation, or business facilitation,” Sudarsan added.
Such an built-in strategy will bolster investor confidence and guarantee undertaking viability, he famous.
According to Vibhuti, Director, South Asia, Institute for Energy Economics and Financial Analysis, the federal government has proven intent in strengthening clear vitality provide chains, significantly in direction of the tail finish, with a concentrate on uncommon earth minerals.
“However, we see limited budgetary support under the PLI scheme for solar modules and cells: segments now considered mature and largely left to market forces. In contrast, electric vehicles (EVs), where cost barriers remain significant, warranted stronger policy and fiscal support. rs are still expensive, and targeted government support could have meaningfully accelerated adoption. This is especially critical in light of worsening air pollution in the Delhi NCR region, where transport electrification can deliver immediate public health benefits,” she added.
India is among the many world’s prime three international locations in rare-earth reserves, with 6.9 million tonnes unfold throughout coastal placer sands in Odisha, Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Goa, Maharashtra and Gujarat, in addition to hard-rock deposits in Rajasthan and Gujarat.
The mines ministry acquired Rs 3,806.45 of BE in FY27 towards Rs 3,038 of BE which was later revised to Rs 3,165.14 crore.
Another key price range announcement is the total exemption of fundamental customs responsibility on capital items imported for processing vital minerals, the place duties earlier ranged from 5 per cent to 7.5 per cent. The transfer is aimed toward constructing home processing capability for minerals important to wash vitality applied sciences, electronics and defence manufacturing.
According to Rajat Verma, founder and chief govt of LOHUM, “By increasing funding for component manufacturing, developing rare earth corridors, and reducing customs duties on equipment for these sectors, the government has given a clear indication that things can’t be done piecemeal, and that upstream, midstream, and downstream are all equally important.”
In a parallel step to spur upstream exercise, further vital minerals shall be included in Schedule XII of the Mines and Minerals (Development and Regulation) Amendment Act, 2023, enabling firms to assert tax deductions on prospecting and exploration expenditure. About 24 vital and strategic minerals had been inserted into Part D of the First Schedule of the MMDR Act, 1957. It will enable tax deductions for exploration and prospecting.
National Critical Mineral Mission (NCMM), launched in January 2025, which goals to reinforce home manufacturing, recycling of vital minerals, and abroad acquisition of vital mineral property. Its mandate contains know-how growth, expert workforce creation, establishing an prolonged producer duty framework, and implementing an appropriate financing mechanism, acquired a tad greater budgetary allocation of Rs 440 crore in 2026-27 (price range estimate) towards Rs 410 crore BE and Rs 90 crore of revised estimate in the 2025-26 monetary 12 months.
Energy transition is seen as a precedence with allocations throughout the Ministry of New and Renewable Energy Rs 32,915 crore, Ministry of Power Rs 29,997 crore and the Department of Atomic Energy Rs 24,124 crore work collectively to scale back dangers from intermittency and import dependence.
In the nuclear sector, the federal government has prolonged the fundamental customs responsibility exemption on specified nuclear energy tools, together with reactor elements and absorber rods till 2035. The profit will now apply to all nuclear energy crops, no matter capability, signalling long-term coverage backing for nuclear vitality as a secure, low-carbon energy supply in India’s vitality combine.
This comes after India amended laws in Atomic Energy Act and Nuclear civil legal responsibility for nuclear injury Act and launched the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India or SHANTI Act in December 2026 to permit personal participation and meet India’s purpose of 100 gigawatts of nuclear energy.
Vibha Dhawan, director basic, TERI stated, “The Union Budget 2026 consolidates India’s long-term transition towards clean, secure, and innovation-driven growth. The continued emphasis on green energy, particularly renewed attention to nuclear power alongside solar and battery energy storage, highlights the importance of diversifying India’s energy mix with reliable baseload capacity, especially for hard-to-abate sectors. Equally significant is the Budget’s push to mainstream artificial intelligence across sectors, from manufacturing to public services, with a clear focus on AI-led productivity gains, efficiency, and digital transparency.”
Customs responsibility exemptions for lithium-ion cells are prolonged to battery vitality storage programs, whereas key inputs for photo voltaic glass manufacturing are exempted. On cleaner fuels, your entire worth of biogas is excluded whereas calculating central excise responsibility on biogas-blended CNG, enhancing the industrial viability of waste-to-energy pathways and metropolis fuel distribution. India may also improve 4 main telescope amenities to spice up astrophysics analysis. Customs responsibility on sodium antimonate for photo voltaic glass manufacturing has been faraway from 7.5 per cent presently.
Trishant Dev, deputy programme supervisor, CSE, stated, “With measures like duty exemptions for capital goods for lithium-ion cell manufacturing or for inputs used in solar glass production, the budget frames India’s energy transition within a broader push for industrial competitiveness and resilient supply chains, supporting domestic production of critical inputs and access to key minerals.”
PM Surya Ghar acquired a budgetary allocation of Rs 22,000 crore (BE) in FY27 towards Rs 20,000 (BE) which was revised downwards to Rs 17,000 crore for the earlier monetary 12 months. Similarly, the price range for bioenergy has been raised from Rs 175 crore to Rs 275 crore.
However, spending on wind vitality, and extra critically on transmission and vitality storage, has both stagnated or declined. “This is concerning because transmission infrastructure and storage are fundamental to integrating higher shares of renewable energy into the grid. As renewable penetration rises, these elements become not optional but indispensable, and the current level of support falls short of what is required,” stated Vibhuti, Director, South Asia, Institute for Energy Economics and Financial Analysis.
The MNRE, energy ministry and division of atomic vitality had been allotted Rs 2,6549.4 crore (BE) vs Rs 26549.3 (RE), Rs 2,1847 crore (BE) vs Rs 21587.66 crore (RE) and Rs 24049.1 crore (BE) vs Rs 24411.47 (RE) in FY26.