Budget 2026: Strengthen India's rare earth element (REE) ecosystem

Finance minister Nirmala Sitharaman

India’s ability to stand shoulder-to-shoulder in the global artificial intelligence (AI) and tech-race would also depend on the pace and extent of the country’s rare earth element (REE) ecosystem. A budgetary push in finance minister Nirmala Sitharaman’s Union Budget 2026 will ensure a stable domestic supply crucial for advanced manufacturing and national security.

Establishing a non-lapsable special fund for REE extraction and processing would provide the dedicated, long-term financial backing required to achieve these strategic objectives. This fund would allow for sustained investment in exploration, infrastructure development, R&D, and international collaborations, bypassing annual budgetary constraints and ensuring consistent progress.

Such a proactive approach is critical for ensuring India's sustained growth in critical high-tech sectors, reducing its vulnerability to external shocks, and cementing its position as a self-reliant technological power on the global stage.

Rare Earth Elements (REEs) are indispensable for modern technologies, serving as critical inputs for semiconductors, electric vehicles, renewable energy, and defence. These 17 distinct metallic elements are the backbone of advanced manufacturing, playing a crucial role in components ranging from smartphone screens to wind turbine magnets.

Their availability is vital for India's future economic growth and technological independence, as any shortage could create significant bottlenecks in manufacturing, innovation, and employment across high-tech sectors. Securing a stable and diversified supply of REEs is therefore a matter of national strategic importance, crucial for both economic resilience and national security in the 21st century.

Accelerate Extraction & Processing

India possesses substantial REE reserves, particularly monazite sands along its coastline. The immediate need is to accelerate their responsible extraction and develop advanced, environmentally sustainable REE processing techniques within the country. This involves not only scaling up mining operations but also investing in refining capabilities that can efficiently separate and purify individual REEs to meet industrial specifications. Establishing a robust domestic supply chain for processed REEs will reduce reliance on external suppliers, mitigate supply chain risks, and add significant value within India's economy, supporting downstream industries from electronics to green energy.

Leverage National Critical Mineral Mission

The National Critical Mineral Mission (NCMM), launched in 2025, is pivotal for India's REE strategy. Under its mandate, the Geological Survey of India (GSI) is tasked with undertaking 1,200 exploration projects between FY25 and FY31 to identify and quantify new REE deposits across the country.

This mission extends beyond mere exploration; it is designed to create a comprehensive framework for critical mineral security, including policy support, regulatory clarity, and incentives for private sector participation. Fully leveraging the NCMM's potential will ensure a systematic approach to resource discovery and utilization, laying the groundwork for sustainable and self-reliant REE production.

Mobilize Resources & R&D

Significant additional investment from central and state governments, alongside robust participation from the private sector, is essential for accelerating research and development (R&D) in REE extraction, processing, and application technologies. This includes developing more efficient and environmentally friendly mining methods, innovating in separation and purification processes (e.g.,

solvent extraction alternatives), and exploring new applications for REEs in emerging technologies. Furthermore, R&D efforts should also focus on recycling technologies to recover REEs from electronic waste, creating a circular economy approach. Such concerted mobilization of resources will foster innovation, build a skilled workforce, and ensure India remains at the forefront of REE technological advancements.

Forge Strategic Partnerships

Given the global concentration of REE production and the complexity of their supply chains, India must actively pursue strategic partnerships with countries rich in REE reserves, such as Myanmar, Vietnam, Brazil, South Africa, and Tanzania.

These partnerships should aim for secure and diversified supply chains, facilitating both direct access to raw materials and the transfer of critical processing technologies. Joint ventures in exploration, mining, and refining can enhance India's overall REE ecosystem, ensuring a consistent and resilient supply while also fostering diplomatic ties and mutual economic benefits. Diversifying import sources and collaborating on technological advancements will insulate India from geopolitical risks and market volatility.