The Union Budget for 2026-27 in India has laid out a plan to create rare earth corridors spanning Odisha, Kerala, Andhra Pradesh and Tamil Nadu, so as to cut import dependence on critical minerals.

This was a response to Beijing's export controls in November 2025.

While the news about rare earth corridors got criticism from some industry experts, Karthik Bansal, Associate Fellow at the Centre of Social and Economic Progress (CSEP), says that New Delhi has a good policy response. 'Take any country that has developed its minerals, including China or Indonesia, and they all first recognise corridors which they are going to use for investment localisation. That is a statement for investors that this is the region you can go to for investments.'

Rare earth magnets became the biggest choke point after the Chinese curbs because these magnets are used across technologies - defence, even in semiconductors, so their stoppage put India in a fix. The corridors policy puts India in a stronger position because the regions chosen for it were also port-related in India. They happen to be rich in rare earth sources.

India sits on 6.9 million metric tonnes of reserves of critical minerals. However, its annual mine output is approximately 2,900 metric tonnes, i.e under 1% of global supply. In fact, in 2024-25, imports of permanent magnets nearly doubled to 57,000 tonnes, with 93% sourced from China.

In fact, Bansal says that even in sectors that seem like India has managed to be independent, the key minerals being utilised for it have not become our priority to be produced within India. 'We pat ourselves and say, hey, it's made in India. But when you think about a product finished in India and you do an assessment of the import dependence of that product, split it across all the materials that are there, the import dependence is very high.'

While India has made some technological improvements in products, the products are far from being made in India. They are assembled here. The processing in India remains relatively low. One of the challenges in scaling this remains that with PLIs, the incentive comes in the very end. 'Producers have to take all the risks, there are no investment guarantees, and processing itself is a challenge. Availability of minerals is also a challenge, so the dependence on China is very tactical.'

He adds that India also needs to think about how exploration can be pushed further. 'The private sector's only push is through exploration licenses (EL) which reduces the firm's capability of doing what it wants to do.' In addition to this, critical mineral blocks are auctioned at a very high premium and a huge sum of profits go to the government. Companies like Vedanta refuse to enter such markets because it isn't profitable. The government is looking at this as a revenue generation mechanism.'
Lastly, he adds, another policy that does not support the National Critical Mineral Mission is India's confusion with environmental and social licensing. 'The government gives companies the lease and asks them to acquire the mine from the community. The community remains unsure of the guarantees because they will either get displaced or they're given very little money.'