Union Budget: Kerala among States picked for ‘Dedicated Rare Earth Corridor’ scheme

Sunday’s Union Budget announcement that Kerala has been selected to set up Special Rare Earth Corridors along with Andhra Pradesh, Odisha and Tamil Nadu should bring joy to the State government as this initiative featured prominently in the Union Budget wish list and the State Budget 2026-27 tabled in Parliament on January 29.

In the wish list submitted ahead of the Union Budget in New Delhi in January, Kerala had requested Rs 1,000 crore for “targeted financial support for corridor infrastructure, technology acquisition and related development”. As Kerala Finance Minister KN Balagopal stated in the State Budget, through this project, Kerala aims to become the “permanent magnet hub of the nation”.

Presenting the Union Budget on Sunday, Ms. Sitharaman had announced that the Center would support four mineral-rich states in setting up a “dedicated rare earth corridor” to “promote mining, processing, exploration and production”.

Abundance of rare earth elements

According to the state government, the coastline contains many rare earth elements such as thorium and scandium, which are needed in areas such as space exploration and defense, energy production, the aviation sector and electric vehicle production. In the Union Budget wish list, Kerala had asked for the establishment of the Special Rare Earth Corridor, noting that Kerala has mineral-sand reserves of 32.435 million tonnes, including about 1.9 million tonnes of monazite, along its coast.

Responding to Ms. Sitharaman’s statement, Mr. Balagopal said that Kerala aims to have minerals-based industries established in Kerala through its proposal. The State does not want minerals to be merely mined and transported out of the State.

According to Kerala’s proposal, this corridor should connect Vizhinjam, where the new international port is located, to Chavara in Kollam district, where Kerala Minerals and Metals Ltd. (KMML) is located, and Kochi “for domestic production of permanent magnets”. With the establishment of the corridor, Kerala expects an investment of ₹ 42,000 crore and 50,000 job opportunities.

permanent magnets

In the State Budget presented by Mr. Balagopal on January 29, ₹100 crore had been allocated to set up a Rare Earth Critical Minerals Mission in partnership with KMML, KELTRON and Non-Ferrous Materials Technology Development Center (NFTDC). Kerala hopes that this initiative will significantly reduce India’s dependence on imported rare earth magnets while supporting industrial requirements. “Monazite is relatively free of clay and other impurities, making it easier to process. About 25% of rare earth oxides (REO) are Neodymium and Praseodymium, which are required for manufacturing permanent magnets used in defence, aerospace and aerospace applications,” Kerala had suggested to the Center during the pre-Budget consultation held by Ms. Sitharaman in January.

However, given Kerala’s ecological sensitivities and coastal and mining-related issues, the actual implementation of this project will likely require in-depth studies and safeguards. Currently large-scale mining activities in Kerala are limited to heavy mineral sands, China clay and to a lesser extent limestone/lime crust, silica sand and granite. According to the Economic Review 2025 prepared by the State Planning Board, in 2024-25, mining and quarrying accounted for an estimated ₹ 2,57,598 lakh in Kerala’s Gross State Value Added (GSVA) ​​at constant prices.