The Union Budget for the fiscal year 2026-27 has unveiled a comprehensive strategy to bolster India's critical mineral and renewable energy sectors, positioning the nation for technological self-reliance and sustainable growth. Among the key announcements is the proposal to establish dedicated rare earth corridors, a move designed to streamline mining, processing, research, and manufacturing activities in mineral-rich states such as Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.
Rare Earths: A Catalyst for India's Semiconductor Ambitions
Rare earth elements are indispensable for India's ambitious semiconductor push, serving as vital components in electronic devices. In today's interconnected world, chips have emerged as among the most critical elements in the global supply chain. By fostering localized production through these corridors, the government aims to reduce dependency on imports and enhance domestic capabilities in high-tech manufacturing. This initiative is expected to attract investments, create jobs, and strengthen India's position in the competitive semiconductor industry.
Renewable Energy Sector Receives Significant Boost
In a parallel effort to advance green energy, the Budget has extended existing basic customs duty exemptions on imports of essential goods for nuclear power projects. This includes equipment for manufacturing lithium-ion cells used in battery storage, sodium antimonate required for solar glass production, and machinery for processing critical minerals. Additionally, the Finance Minister proposed excluding the value of biogas when calculating excise duty on blended Compressed Natural Gas (CNG), further incentivizing cleaner fuel alternatives.
Aligning with India's Energy Targets
These proposals hold immense significance in light of India's ambitious target of achieving 500 gigawatts of non-fossil energy capacity by 2030. The government has also set a long-term goal of reaching 100 gigawatts of nuclear power capacity by 2047. To support this vision, the allocation for viability gap funding for battery storage projects has been increased five-fold to Rs 1,000 crore, ensuring financial viability for large-scale renewable initiatives.
Private Sector Participation and Economic Impact
The Budget announcements follow the recent Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Bill, 2025, which opens the nuclear energy sector to private participation. By lowering input costs through duty exemptions, the policy is anticipated to improve project economics, fortify India's nuclear supply chain, and attract global original equipment manufacturers. This strategic approach is poised to accelerate the adoption of renewable energy technologies while fostering innovation and competitiveness in the sector.
Overall, the Budget 2026-27 underscores the government's commitment to leveraging rare earth resources and renewable energy as dual pillars for India's technological advancement and environmental sustainability. With these measures, India aims to not only meet its energy and semiconductor goals but also emerge as a global leader in green and high-tech industries.
