The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a ₹2,814 crore capital expenditure support scheme to strengthen India’s domestic critical mineral processing capabilities, with a focus on lithium and nickel. The scheme will be implemented over five years, from FY 2026-27 to 2030-31, to reduce import dependence and develop a resilient domestic supply chain for critical minerals.
India currently relies substantially on imports for refined critical mineral intermediates and high-purity materials. Domestic beneficiation and processing infrastructure for minerals such as lithium, nickel and cobalt remains at an early stage. High capital requirements, limited access to suitable technologies and constraints in raw material availability have also slowed the development of commercial-scale processing facilities.
The newly approved scheme aims to address these challenges by providing targeted capital expenditure support for establishing and operationalising domestic processing plants. It seeks to increase domestic value addition, encourage investment in mineral processing and strengthen India’s position across the critical mineral value chain.
Under the scheme, four processing plants will be established, comprising two lithium processing facilities and two nickel processing facilities. Each lithium plant will have a minimum processing capacity of 30 kilotonnes (kt), while each nickel plant will have a minimum capacity of 50 kt. The facilities will process lithium and nickel ores or intermediary products into high-purity compounds. Cobalt is also expected to be recovered as a by-product of nickel production.
The government will provide a capital subsidy covering 30% of eligible investment. Financial assistance will be capped at ₹500 crore per beneficiary for lithium processing projects and ₹900 crore per beneficiary for nickel processing projects.
Beneficiaries will be selected through a two-stage process. Applicants will first undergo technical evaluation, with only qualified participants progressing to the financial bidding stage. For each mineral category, two beneficiaries will be selected based on the least-cost criterion, considering the lowest capital expenditure support requested from the government. Incentives will be disbursed in three tranches against the achievement of specified project milestones.
The scheme is expected to support industries that depend on critical minerals, including electric mobility, battery energy storage systems (BESS), electronics, defence and speciality steel.
With lithium and nickel playing an important role in battery manufacturing and other advanced technologies, expanding domestic processing capacity is essential for India’s manufacturing ambitions and energy transition.
The initiative is part of the government’s broader Atmanirbhar Bharat agenda. By encouraging domestic investments in critical mineral processing, the scheme aims to strengthen supply chain resilience, promote import substitution and build an integrated domestic ecosystem for strategic materials.
