New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a scheme, titled ‘Capex Support Scheme to Promote Critical Mineral Processing’, with a financial outlay of ₹2,814 crore over five years.
The scheme aims to strengthen India’s domestic processing capabilities for critical minerals, particularly lithium and nickel, reduce import dependence and establish resilient domestic value chains.
The approval comes amid growing concerns over the geographical concentration of critical mineral processing in a few global locations.
Such concentration exposes supply chains to geopolitical disruptions, price volatility and potential supply restrictions, posing significant challenges to supply chain resilience and economic security.
The dependence on a limited number of global processing locations also has implications for national security, economic sovereignty and the timely achievement of decarbonisation targets.
Against this backdrop, developing domestic critical mineral processing infrastructure has become important for strengthening India’s supply chain resilience.
India to Strengthen Domestic Critical Mineral Processing Capabilities
At present, India remains substantially dependent on imports for refined intermediates and high-purity materials due to the nascent stage of its domestic beneficiation and processing infrastructure for critical minerals, including lithium, nickel and cobalt.
Domestic critical mineral processing capacity remains limited, with commercial-scale projects facing several challenges. These include high capital requirements, limited availability of suitable technologies and constrained access to raw materials.
The development of domestic processing infrastructure is therefore considered imperative for maximising value addition within the country, achieving import substitution and establishing resilient end-to-end value chains.
To address these challenges, the government has formulated the ‘Capex Support Scheme to Promote Critical Mineral Processing’ to provide targeted capital expenditure support for establishing and operationalising domestic processing facilities.
The scheme aims to develop India’s domestic critical mineral processing capabilities, promote value addition within the country, reduce import dependence and strengthen the overall critical mineral value chain.
Scheme Targets Lithium and Nickel Processing Plants
The newly approved critical mineral processing scheme will focus on converting lithium and nickel ores and intermediary products into high-purity compounds. Cobalt is also expected to be recovered as a by-product of nickel production.
The development of these processing capabilities is expected to support several critical sectors, including electric mobility, Battery Energy Storage Systems (BESS), electronics, defence and speciality steel.
By strengthening domestic processing capabilities for lithium and nickel, the scheme aims to support the development of critical mineral value chains required by these sectors.
₹2,814 Crore Outlay for Four Critical Mineral Processing Plants
The scheme envisages a total financial outlay of ₹2,814 crore and will be implemented over five years, from FY 2026-27 to FY 2030-31.
Under the critical mineral processing scheme, the government will provide a capital subsidy of 30% of eligible investment for establishing four processing plants.
These four plants will comprise:
- Two lithium processing plants: Each with a minimum processing capacity of 30 kilotonnes (kt).
- Two nickel processing plants: Each with a minimum processing capacity of 50 kilotonnes (kt).
The maximum capital support under the scheme will be capped at ₹500 crore per lithium beneficiary and ₹900 crore per nickel beneficiary, respectively.
The capital subsidy is intended to encourage investments in domestic critical mineral processing infrastructure and support the establishment of commercial-scale facilities for lithium and nickel processing.
Two-Stage Selection Process for Beneficiaries
The government will follow a two-stage process to select beneficiaries under the Critical Mineral Processing scheme.
In the first stage, applications will be assessed for technical qualification. Only applicants who meet the technical qualification requirements will be eligible to participate in the second stage, which will involve financial bidding.
For each mineral, two beneficiaries will be selected based on the least-cost criterion. This means that the applicants seeking the lowest capital expenditure support from the government under the scheme will be prioritised.
The incentives will be disbursed in three tranches, linked to the achievement of specified milestones.
Through this selection and incentive-disbursement mechanism, the scheme aims to support the establishment and operationalisation of domestic lithium and nickel processing facilities.
Scheme to Advance Atmanirbhar Bharat Objectives
The approval of the ₹2,814 crore critical mineral processing scheme marks a step towards advancing the objectives of Atmanirbhar Bharat by supporting the development of resilient domestic processing infrastructure.
The initiative is aimed at strengthening India’s capabilities across the critical mineral value chain, reducing reliance on imported refined materials and increasing domestic value addition.
With targeted capital expenditure support for lithium and nickel processing facilities, the scheme seeks to build domestic capabilities that can support sectors such as electric mobility, battery energy storage, electronics, defence and speciality steel.
