Why Kerala's fear of Centre's 'Rare Earth Corridor' is misplaced?

Sunday's Budget announcement is in line with ongoing measures for self-reliance in the manufacturing of rare earth permanent magnets (REPM), vital to meet rapidly growing demand from upstream industries in sectors such as electric vehicles, renewable energy, electronics, aerospace, and defence.

• Kerala rejects Centre's rare earth corridor plan, citing resource control concerns.
• Experts say the corridor could bring jobs, infrastructure, and industrial growth
• Centre aims to boost rare earth magnet manufacturing for key industries

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Sunday’s Union Budget announcement that Kerala has been picked, along with three other states, for establishing Dedicated Rare Earth Corridors should have immediately brought cheer to the state government. On the contrary, the state government has expressed several concerns with the announcement, with several ministers questioning the intent behind the Union Budget proposal to establish dedicated rare earth corridors.

Why Kerala is resisting the Centre's move?

One of the primary objections raised by the Kerala chief minister Pinarayi Vijayan is that the proposed changes by the Centre will pave the way for private monopolies in mining by easing environmental clearances. "The announcement in the Union Budget ran contrary to Kerala's plan to develop a public sector mineral corridor linking Vizhinjam, Chavara and Kochi," Vijayan said.

Kerala Industries minister P Rajeeve, speaking to The Indian Express, said the state needed to examine whether the move was aimed at exploiting Kerala’s resources. “We have to see whether it is meant to exploit Kerala’s rare earth and minerals and to take the wealth out of the state. "Certain amendments have been proposed which will help the Centre take direct control of the auction of minerals. Hence, we have to examine whether this proposal for the corridor is to take control over the minerals which are in the custody of the state,” the publication reported, citing the minister.

Why the arguments fall short

If Kerala rejects the central initiative, the Centre may bypass the state government to implement the project directly or move it to more cooperative states such as Odisha or Tamil Nadu. Rare earth elements (REEs) require complex, capital-intensive processing and global supply chain integration that a single state PSU may struggle to achieve alone. The Centre’s plan aims to build a complete ecosystem, from mining to the manufacturing of Rare Earth Permanent Magnets (REPMs), which offers a much higher value-add than the state’s focus on raw extraction.

How experts are viewing the move

According to Dr V Ambili, deputy director general (DDG) of the Kerala unit of the Geological Survey of India (GSI), the announcement is big news for the state. “Once the corridor is established, the state will witness industrial revolution-scale development. Besides benefitting from the revenue generated through royalties, the state will also see a large number of jobs opening up. The corridor will need new infrastructure and raw-material processing, and other associated activities will need skilled people,” said Ambili.

As to allegations that the Centre is trying to rob the state of its mineral wealth, she said, “The central government is very serious about pursuing the project. So, if the state government doesn’t implement the project, the Centre could take its place. Once that happens, we will have no one else to blame,” she added.

How the Centre's move is in line with ongoing measures

Sunday's Budget announcement is in line with ongoing measures for self-reliance in the manufacturing of rare earth permanent magnets (REPM), vital to meet rapidly growing demand from upstream industries in sectors such as electric vehicles, renewable energy, electronics, aerospace, and defence. The Union cabinet had last year approved a Rs I7,280 crore scheme to promote the manufacture of sintered rare earth permanent magnets (REPMs), aiming to establish 6,000 tonnes per annum of integrated capacity.