The Union Cabinet on Wednesday approved a Rs 2,814 crore capital expenditure support scheme to promote domestic processing of critical minerals, including lithium and nickel, as India seeks to reduce its dependence on imported materials essential for electric vehicles, battery manufacturing and advanced technologies.
The decision was taken at a Cabinet meeting chaired by Prime Minister Narendra Modi. The scheme will be implemented over five years, from 2026-27 to 2030-31, and will provide financial assistance for establishing and operationalising four critical mineral processing facilities.
Information and Broadcasting Minister Ashwini Vaishnaw announced the decision during a Cabinet briefing, highlighting the government's efforts to strengthen domestic capabilities under the National Critical Mineral Mission.
The initiative will focus on converting lithium and nickel ores and intermediate products into high-purity compounds, while also enabling the recovery of cobalt as a by-product of nickel processing.
The government said the scheme would support domestic value addition, reduce import dependence and develop more resilient supply chains for industries considered strategically important to India's economic and technological development.
๐๐ผ๐๐ฟ ๐ฝ๐ฟ๐ผ๐ฐ๐ฒ๐๐๐ถ๐ป๐ด ๐ฝ๐น๐ฎ๐ป๐๐ ๐ฝ๐น๐ฎ๐ป๐ป๐ฒ๐ฑ
Under the scheme, the government will provide a capital subsidy equivalent to 30 per cent of eligible investment for setting up four critical mineral processing plants.
These will include two lithium processing facilities, each with a minimum capacity of 30,000 tonnes, and two nickel processing facilities, each with a minimum capacity of 50,000 tonnes.
The maximum capital assistance will be capped at Rs 500 crore for each lithium processing beneficiary and Rs 900 crore for each nickel processing beneficiary.
The proposed facilities will process mineral ores and intermediary products into high-purity compounds required by downstream manufacturing industries.
Cobalt, another strategically important mineral used in battery technologies and industrial applications, is expected to be recovered during nickel processing.
The government said the initiative would help establish domestic processing capabilities in an industry where India currently relies heavily on imported refined materials.
๐๐ฒ๐ป๐ฒ๐ณ๐ถ๐ฐ๐ถ๐ฎ๐ฟ๐ถ๐ฒ๐ ๐๐ผ ๐ฏ๐ฒ ๐๐ฒ๐น๐ฒ๐ฐ๐๐ฒ๐ฑ ๐๐ต๐ฟ๐ผ๐๐ด๐ต ๐ฏ๐ถ๐ฑ๐ฑ๐ถ๐ป๐ด
The selection of companies eligible for financial assistance will take place through a two-stage competitive process.
In the first stage, applications will undergo technical evaluation to determine whether prospective beneficiaries possess the necessary capabilities to establish and operate critical mineral processing facilities.
Only applicants meeting the prescribed technical qualifications will be permitted to participate in the second stage, involving financial bidding.
For each mineral, two beneficiaries will be selected based on the lowest capital expenditure support sought under the scheme.
The government said the least-cost selection mechanism would ensure that financial assistance was allocated competitively.
Incentives will be released in three instalments linked to the achievement of specified project milestones, rather than being disbursed entirely at the beginning.
The arrangement is intended to connect government support with actual progress in establishing and operationalising processing infrastructure.
๐๐บ๐ฝ๐ผ๐ฟ๐ ๐ฑ๐ฒ๐ฝ๐ฒ๐ป๐ฑ๐ฒ๐ป๐ฐ๐ฒ ๐ฟ๐ฎ๐ถ๐๐ฒ๐ ๐ฐ๐ผ๐ป๐ฐ๐ฒ๐ฟ๐ป๐
The Cabinet noted that the global processing of critical minerals remains concentrated in a limited number of geographical locations, exposing international supply chains to geopolitical disruptions, price volatility and export restrictions.
Such concentration has implications for economic security, national security and the ability of countries to achieve their clean-energy transition targets.
India currently depends substantially on imports of refined intermediates and high-purity materials because domestic processing infrastructure for lithium, nickel and cobalt remains at an early stage of development.
The government identified high capital requirements, limited access to suitable technologies and constraints in raw material availability as major obstacles to establishing commercial-scale processing facilities.
These challenges have restricted domestic value addition despite growing demand for critical minerals across manufacturing industries.
The proposed scheme seeks to address the investment barrier by reducing the initial capital burden on companies willing to establish processing facilities in India.
๐๐ฉ๐, ๐ฏ๐ฎ๐๐๐ฒ๐ฟ๐ถ๐ฒ๐ ๐๐ผ ๐ฏ๐ฒ๐ป๐ฒ๐ณ๐ถ๐
Lithium and nickel are important materials for lithium-ion batteries used in electric vehicles, energy storage systems and electronic devices.
Cobalt is also used in certain battery chemistries, making the recovery of the mineral during nickel processing commercially significant.
The government expects the new facilities to support electric mobility, battery energy storage systems, electronics, defence manufacturing and speciality steel production.
India's expanding electric vehicle industry and growing demand for grid-scale energy storage have increased the strategic importance of securing reliable supplies of battery materials.
Developing domestic processing capacity could help manufacturers access refined mineral compounds without depending entirely on overseas processing facilities.
The initiative is also expected to strengthen the country's position in emerging clean-energy manufacturing supply chains.
๐ฃ๐๐๐ต ๐ณ๐ผ๐ฟ ๐ฐ๐ฟ๐ถ๐๐ถ๐ฐ๐ฎ๐น ๐บ๐ถ๐ป๐ฒ๐ฟ๐ฎ๐น ๐๐ฒ๐ฐ๐๐ฟ๐ถ๐๐
The latest Cabinet approval forms part of the government's broader efforts to strengthen India's critical mineral ecosystem under the National Critical Mineral Mission.
The mission seeks to improve the availability of strategically important minerals through domestic exploration, overseas sourcing, processing, recycling and supply-chain development.
While access to mineral resources remains important, the government has increasingly emphasised the need to develop processing capabilities within India.
This is because the availability of mineral ores does not automatically translate into supplies of battery-grade or industrial-grade materials required by manufacturers.
The new scheme specifically targets this gap by supporting facilities capable of producing high-purity compounds from ores and intermediate materials.
The government said the initiative would advance the objectives of Atmanirbhar Bharat by strengthening domestic manufacturing capabilities and reducing vulnerabilities arising from concentrated international supply chains.
The effectiveness of the programme will depend on the timely establishment of processing plants, access to raw materials and technologies, and the ability of domestic producers to supply commercially competitive refined mineral products.