In a move to optimise India's critical mineral resources, Union finance minister Nirmala Sitharaman on Sunday announced a slew of reforms in the sector, including the setting up of dedicated rare earth corridors and tax incentives.

In her Union Budget speech for 2026-27, she proposed establishing dedicated rare earth corridors to promote mining, processing, research and manufacturing in mineral-rich states of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.

The budget also proposed providing a basic customs duty exemption for the import of capital goods required for the processing of critical minerals in India. Further, to incentivise the prospecting and exploration of the critical minerals, the Union finance minister proposed to include certain critical minerals in the list of minerals in Schedule XII of the Act, thereby making expenditure on prospecting and exploring such critical minerals eligible for deduction as per the provision of section 51 of the Act.

Also, the Basic Customs Duty (BCD) on monazite was reduced from 2.5% to zero. Monazite is a crucial mineral for extracting rare-earth elements (REEs), which are vital for high-tech products such as wind turbines, EVs, electronics, and catalysts. Monazite is abundantly available on the shores of south Kerala.

In November 2025, the government launched a National Critical Mineral Mission, with a focus to securing stable and sustainable supply chain for essential minerals, with a ₹16,300 crore outlay to boost domestic exploration, refining, and recycling by 2030-31. The policy identifies 30 critical minerals, enabling government-led auctions and promoting international partnerships to reduce import dependence.

Major REE deposits in south India are monazite, lanthanum, cerium, neodymium, and praseodymium, along with thorium, yttrium, and zirconium. Key areas include the coastal districts of Kerala (Kollam) for monazite and ilmenite, Tamil Nadu (Kanyakumari, Tirunelveli), Andhra Pradesh (Anantapur, Srikakulam), and Telangana.