Union Budget 2026: Kerala Targets INR 42,000 Cr Investment from Rare Earth Corridor Plan

Kerala has been selected by the Centre for establishing a 'Dedicated Rare Earth Corridor' under the Union Budget 2026, along with Andhra Pradesh, Odisha and Tamil Nadu, a move expected to boost domestic mining, processing, research and manufacturing of critical minerals. 

With this, the State has projected that the project could attract investments of about INR 42,000 crore and generate around 50,000 jobs. The proposal was included in Kerala’s Union Budget wish list submitted in January and in the State Budget tabled on January 29.

In its submission to the Centre, Kerala had sought INR 1,000 crore for targeted financial support for corridor infrastructure, technology acquisition and related development. Through the project, the State aims to emerge as the country’s permanent magnet manufacturing hub, as outlined by Finance Minister K.N. Balagopal in the State Budget.

Presenting the Union Budget, Finance Minister Nirmala Sitharaman said that the Centre would support the four mineral-rich States in setting up dedicated rare earth corridors to promote mining, processing, research and manufacturing, as India seeks to navigate China’s dominance in the sector.

According to the State government, Kerala’s coastline has abundant reserves of rare earth elements such as thorium and scandium, which are vital for sectors including defence, space research, energy generation, aviation and electric vehicle manufacturing. Kerala estimates it has 32.435 million tonnes of mineral-sand reserves along its coast, including nearly 1.9 million tonnes of monazite.

The proposed corridor is planned to link Vizhinjam, where the new international seaport is located, with Chavara in Kollam district, home to Kerala Minerals and Metals Ltd. (KMML), and Kochi, with a focus on domestic production of permanent magnets.