India Bets Big on Rare Earths and Clean Energy in $10 Billion Push to Counter China's Dominance
In a decisive move to secure its economic and strategic future, India has unveiled a sweeping financial plan exceeding $10 billion to build a self-sufficient ecosystem for critical minerals and clean energy. The Union Budget 2026-27, presented over the weekend, marks a significant escalation in New Delhi's efforts to break China's stranglehold on global rare earth supplies and accelerate its transition to green power.
Finance Minister Nirmala Sitharaman announced the creation of dedicated "rare earth corridors" across the coastal states of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These integrated zones will link mining, processing, research, and manufacturing hubs, aiming to streamline the production of Rare Earth Elements (REEs)—vital components for electric vehicles, defense systems, and consumer electronics.
The initiative builds upon an existing $800 million scheme to manufacture Sintered Rare Earth Permanent Magnets, targeting an annual capacity of 6,000 tonnes. India plans to leverage its estimated 8.52 million tonnes of REE reserves, primarily found in monazite-rich beach sands. "This is about strategic autonomy," said Civil Aviation Minister Ram Mohan Naidu. "By mastering the domestic value chain from mine to magnet, we insulate our high-tech industries from external volatility."
Beyond minerals, the budget signals a multi-pronged thrust in renewable energy. Allocations for the Ministry of New & Renewable Energy saw a nearly 30% increase to $3.7 billion. Flagship solar programs, including the PM Surya Ghar scheme for rooftop solar, received major boosts, with total targeted investments across green energy initiatives surpassing $9.6 billion.
A cornerstone of the clean energy push is a reinforced commitment to nuclear power as a baseload source. The Department of Atomic Energy received a $2.7 billion allocation, with R&D funding for the Bhabha Atomic Research Centre nearly doubled. The budget explicitly supports the development of Small Modular Reactors (SMRs), with a goal to operationalize five indigenous units by 2033. Tax concessions and extended customs duty exemptions aim to fast-track projects, potentially including repurposing retired coal plant sites.
The government's roadmap is ambitious: scaling nuclear capacity from the current ~7.5 GW to 22 GW by 2032, and ultimately to 100 GW by 2047. This expansion continues to rely on strategic partnerships, notably with Russia for the Kudankulam plant and fuel supply.
Analyst & Industry Reactions:
"This is a game-changer for India's manufacturing ambitions," said Priya Sharma, a commodities analyst at Mumbai-based think tank Gateway House. "The corridor model, if executed well, can significantly reduce processing costs and attract downstream manufacturers, creating a genuine alternative to Chinese supply."
"Finally, a budget that connects mineral security with energy security," remarked Arjun Mehta, CEO of a renewable energy startup in Hyderabad. "The focus on SMRs is particularly astute. They offer scalable, safer nuclear power that can complement renewables and provide stable power for industrial clusters near the proposed rare earth zones."
"It's a classic case of too little, too late, and wildly optimistic," countered Dr. Sanjay Kapoor, a retired geologist and vocal critic. "$10 billion sounds impressive, but it's a fraction of what China invests annually. Their decades-long head start isn't erased by one budget. The 100 GW nuclear target by 2047 is a fantasy, ignoring regulatory hurdles, public resistance, and the sheer scale of investment needed. This is more about political signaling than practical industrial policy."
"The job creation potential, especially in coastal states like Kerala, is immense," noted Lakshmi Nair, an economics professor at University of Kerala. "However, the success hinges on transparent bidding for projects, stringent environmental safeguards for mining, and developing a skilled workforce. The social license to operate is as crucial as the financial outlay."