Budget 2026 Focus on Critical Minerals and Capex to Boost Metals and Mining

Union Budget 2026 has provided a comprehensive policy and investment framework aimed at strengthening India’s metals and mining sector, positioning it as a key pillar for manufacturing expansion and infrastructure development. With growing demand from construction, transport, energy and clean technology segments, the Budget focuses on improving domestic mineral availability while enhancing competitiveness across the value chain.

A central highlight of the Budget is the allocation of ₹12.2 lakh crore towards public capital expenditure. This sustained capex commitment is expected to significantly boost demand for steel, aluminium and other core metals through investments in highways, high-speed rail corridors, urban infrastructure and logistics networks, particularly in Tier II and Tier III cities.

The Budget has placed special emphasis on critical and rare earth minerals, recognising their strategic importance for electric mobility, renewable energy, electronics and advanced manufacturing. To strengthen domestic capacity, the government has proposed dedicated policy measures to accelerate exploration, mining, processing and downstream manufacturing of these minerals, while reducing reliance on imports.

Key policy measures announced in Budget 2026 include:

• Establishment of dedicated Rare Earth Corridors to support mineral-rich states such as Odisha, Andhra Pradesh, Tamil Nadu and Kerala.
• Operationalisation of 20 new National Waterways over the next five years, starting with NW-5 in Odisha, to improve connectivity between mineral clusters, industrial centres and ports.
• Customs duty exemptions on capital goods required for processing critical minerals in India.
• Continued support for Carbon Capture, Utilisation and Storage (CCUS) technologies with an outlay of ₹20,000 crore, covering sectors including steel.

From a taxation perspective, the Budget has proposed targeted incentives to encourage mineral exploration. Expenses incurred during the year of commercial production and up to four preceding years for specified critical minerals will be allowed as deductions over a ten-year period. In addition, simplification of compliance timelines and customs duty deferment mechanisms are expected to ease working capital pressures for metal producers and mining companies.

Industry experts believe these measures will help unlock investments, improve connectivity to mineral-rich regions and strengthen India’s metals and mining ecosystem. With policy stability, infrastructure-led demand and a clear focus on value addition, Budget 2026 is expected to accelerate growth across the metals and mining sector while supporting long-term manufacturing and economic development.