Govt proposes duty exemption on capital goods to process critical minerals, dedicated corridors

New Delhi: The government on Sunday proposed setting up dedicated corridors in mineral-rich states and exempting imports of capital goods used in processing critical minerals from basic customs duty, as part of its push to strengthen domestic mining and downstream capabilities.

The measures assume significance amid India’s focus on securing rare earth and other critical minerals to cut import dependence and support fast-growing sectors such as electric vehicles, renewable ener-gy, electronics, aerospace and defence.

Finance Minister Nirmala Sitharaman said a basic customs duty exemption would be provided on the import of capital goods required for pro-cessing critical minerals in India.

She also announced support for mineral-rich states including Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated Rare Earth Corridors aimed at promot-ing mining, processing, research and manufacturing.

The finance minister noted that a Scheme for Rare Earth Permanent Magnets was launched in No-vember 2025 and proposed reducing customs duty on monazite — a key source of rare earth elements — to zero from the existing 2.5 per cent. Monazite is a phosphate mineral containing rare earth ele-ments such as cerium, lanthanum and neodymium, and is also a source of thorium.

In November 2025, the Union Cabinet had approved a Rs 7,280-crore Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets. The initiative targets the creation of 6,000 metric tonnes per annum of integrated Rare Earth Permanent Magnet (REPM) manufacturing capacity in In-dia, covering the entire value chain from rare earth oxides to metals, alloys and finished magnets.

REPMs are among the strongest permanent magnets and are critical inputs for EVs, wind turbines, electronics, aerospace and defence systems. With demand driven by rapid growth in clean energy, mobility and industrial applications, India’s consumption of REPMs is projected to double by 2030 from 2025. At present, most of this demand is met through imports.

The government said the initiatives would help establish India’s first integrated REPM manufacturing facilities, generate employment, enhance self-reliance in critical minerals and support the country’s long-term Net Zero 2070 goals.