Union Government Extends Support to Kerala's Ambitious Rare Earth Corridor Project
In a significant boost to Kerala's industrial aspirations, the Union government has thrown its weight behind the state's plan to establish a rare earth corridor along its mineral-rich coastline. This development was highlighted during Union Finance Minister Nirmala Sitharaman's budget speech for the fiscal year 2026-27.
Budget Announcement and Strategic Importance
During her address, Sitharaman explicitly mentioned that the government proposes to support mineral-rich Kerala in setting up a rare earth corridor. This initiative is designed to promote comprehensive activities including mining, processing, research, and manufacturing of these critical elements. The corridor is envisioned to stretch from the Vizhinjam port to Chavara, tapping into the abundant coastal sands known for their rare earth deposits.
This move aligns with a broader national scheme for rare earth permanent magnets that was launched in November 2025. The Union cabinet had earlier approved this scheme with a substantial financial outlay of Rs 7,280 crore, aiming to establish 6,000 Metric Tons per Annum of integrated Rare Earth Permanent Magnet manufacturing capacity.
State-Level Preparations and Financial Commitment
Kerala has already taken proactive steps towards this goal. State Finance Minister K N Balagopal recently announced an allocation of Rs 100 crore for a Rare Earth Critical Minerals Mission. This mission will be executed in partnership with key entities such as The Kerala Minerals and Metals Ltd, Keltron, and the Non-Ferrous Materials Technology Development Centre based in Hyderabad.
Balagopal emphasized that the proposed corridor could eventually be extended to Kochi, further enhancing its logistical and economic reach. He highlighted the presence of valuable rare earth elements like thorium and scandium along the coastline, which are crucial for various high-tech industries.
Broader National Context and Benefits
The Union government's support is not limited to Kerala alone. Similar backing has been extended to other mineral-rich states including Odisha, Andhra Pradesh, and Tamil Nadu. This coordinated approach underscores a national strategy to harness India's mineral resources effectively.
Sources indicate that central involvement is particularly beneficial for Kerala, as rare earths fall under the central government's purview. The state may lack the advanced technological capabilities required for value addition, making Union support essential. The central government can facilitate collaboration between public and private sectors to maximize the utilization of these minerals.
Applications and Economic Impact
Rare earth elements are indispensable for modern technology. They are vital components in energy generation, the defence and aviation sectors, and the production of electric vehicles, drones, and medical equipment such as CT scan machines. Rare Earth Permanent Magnets, one of the strongest types of magnets, are especially critical for electric vehicles, renewable energy systems, electronics, aerospace, and defence applications.
The scheme supported by the Union government will aid in creating manufacturing facilities that transform rare earth oxides into metals, alloys, and finally into finished REPMs. This integrated approach aims to enhance India's self-reliance and position the country as a key player in the global REPM market.
Kerala aspires to become the nation's permanent magnet hub, leveraging this corridor to drive industrial growth and technological advancement. The initiative represents a first-of-its-kind effort in India, promising to boost the local economy while contributing to national strategic interests.
