The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a capital support scheme worth ₹2,814 crore to promote the processing of critical minerals. The scheme will be implemented over a five-year period, from the financial year 2026-27 to 2030-31. Its objective is to develop domestic capacity for processing critical minerals—such as lithium and nickel—within the country and to reduce reliance on imports.
Currently, the processing of critical minerals is concentrated in a few select geographical regions globally. This creates a risk that global supply chains could be disrupted by geopolitical developments, price volatility, or potential restrictions on supply. Such disruptions could, in turn, impact national security, economic sovereignty, and the achievement of carbon emission reduction targets.
At present, India remains heavily dependent on imports for refined intermediate products and high-purity materials derived from critical minerals, including lithium, nickel, and cobalt. The infrastructure for processing and refining these minerals is still in its nascent stage in the country. Large-scale projects face several challenges, such as the need for substantial capital investment, limited access to appropriate technology, and difficulties in securing raw materials.
Plan to Establish Four Processing Plants
Under this scheme, four critical mineral processing plants will be established in the country. These will include two lithium processing plants, each with a minimum capacity of 30,000 tonnes (30 kt), and two nickel processing plants, each with a minimum capacity of 50,000 tonnes (50 kt).
The scheme offers a 30 per cent capital subsidy on eligible investments. However, the support is capped at a maximum of ₹500 crore per beneficiary for lithium projects and ₹900 crore per beneficiary for nickel projects. The goal is to process lithium and nickel ores—as well as intermediate products—into high-purity compounds. Cobalt is also expected to be obtained as a by-product during nickel production.
Selection of beneficiaries to take place in two stages
Under the scheme, beneficiaries will be selected in two stages. The first stage will involve a technical evaluation of applications; only those applicants deemed eligible will be permitted to participate in the second stage—the financial bidding process. For each mineral, two beneficiaries will be selected based on the lowest cost—meaning that bidders seeking the least amount of capital support under the scheme will be given priority.
The incentive amount will be disbursed in three phases, linked to defined targets and achievements.
Benefits for the electric mobility and defense sectors
According to the government, developing domestic capacity for the processing of critical minerals will boost value addition within the country and reduce reliance on imports. This will provide support to key sectors such as electric mobility, Battery Energy Storage Systems (BESS), electronics, defence, and speciality steel.
This scheme represents a significant step toward advancing the goal of an ‘Atmanirbhar Bharat’ (Self-Reliant India), strengthening India’s capabilities across the entire value chain of critical minerals, and building a robust infrastructure for domestic processing.
