NEW DELHI, Nov 5: The Union Cabinet has approved a Rs 2,814-crore scheme to strengthen India’s domestic critical mineral processing industry, with a particular focus on establishing facilities for lithium and nickel, two essential materials used in electric vehicle batteries, energy storage systems and advanced manufacturing.
The five-year Capex Support Scheme to Promote Critical Mineral Processing will run from the financial year 2026-27 to 2030-31 and provide financial assistance for setting up four processing facilities across the country.
The initiative aims to establish two lithium processing plants, each with a minimum annual processing capacity of 30,000 tonnes, and two nickel processing facilities with a minimum capacity of 50,000 tonnes each.
Under the approved framework, eligible companies will receive capital subsidies equivalent to 30 per cent of the qualifying investment. The financial assistance will be capped at Rs 500 crore for each lithium processing beneficiary and Rs 900 crore for each nickel processing beneficiary.
The government expects the programme to encourage private sector participation, attract fresh investment and improve India’s ability to process critical minerals domestically instead of depending heavily on imported refined materials.
Lithium and nickel have become increasingly important to the global industrial economy because of their extensive use in battery manufacturing, electric mobility and clean energy technologies.
Lithium is a key component in rechargeable batteries used in electric vehicles, mobile devices and stationary energy storage systems. Nickel, meanwhile, is widely used in several battery chemistries and plays an important role in stainless steel, speciality alloys and other industrial applications.
India’s growing electric vehicle market and expanding renewable energy infrastructure have increased the importance of establishing a reliable supply chain for these materials.
At present, the country’s dependence on imported refined intermediates and high-purity mineral products remains a major challenge. Domestic processing capabilities have been constrained by high capital requirements, limited access to advanced technologies and difficulties in securing sufficient raw materials.
The newly approved scheme seeks to address these structural gaps by supporting the development of processing infrastructure and encouraging investment in technologies required to convert mineral ores and intermediate products into usable industrial materials.
According to the scheme’s framework, the selection of beneficiaries will take place through a two-stage procedure. Applicants will first undergo technical qualification, after which eligible companies will participate in competitive financial bidding.
Two applicants for each mineral category will be selected based on the lowest capital support requested from the government.
The financial incentives will be released in three instalments linked to the achievement of specified milestones, ensuring that assistance is connected to actual project progress rather than being provided entirely at the initial stage.
The scheme also provides an opportunity to recover cobalt as a by-product during nickel processing. Cobalt is another strategically important mineral used in battery manufacturing and several advanced industrial applications.
The recovery of additional valuable materials could improve the commercial viability of processing facilities and contribute to more efficient utilisation of mineral resources.
Industry representatives have welcomed the government’s decision, describing domestic processing capacity as an important missing component in India’s critical mineral value chain.
Nitin Gupta, co-founder and chief executive officer of Attero, said the Rs 2,814-crore initiative addressed one of the major gaps in the country’s critical mineral ecosystem.
He noted that the emphasis on lithium and nickel processing could encourage private investment, support technological development and increase domestic value addition.
The programme is also expected to benefit industries beyond electric vehicles. Battery energy storage systems, electronics manufacturing, speciality steel production and defence-related manufacturing are among the sectors that require reliable access to critical minerals.
India’s transition towards clean energy has increased the need for large-scale battery storage facilities, particularly as solar and wind power generation expands. Since renewable energy production can fluctuate depending on weather conditions, storage technologies are essential for maintaining a stable electricity supply.
A stronger domestic processing ecosystem could help battery manufacturers secure important raw materials while reducing exposure to disruptions in international supply chains.
The initiative also carries significance for India’s broader manufacturing ambitions. The country has been attempting to strengthen domestic production across electronics, automobiles, renewable energy and defence equipment, sectors where access to specialised materials is becoming increasingly important.
Dependence on a limited number of international suppliers can expose manufacturers to price fluctuations, export restrictions, geopolitical tensions and transportation disruptions.
By developing domestic processing facilities, India hopes to improve supply security and create greater control over an important stage of the industrial value chain.
However, establishing processing capacity will require more than financial assistance. Companies will need access to dependable raw material supplies, advanced refining technologies, skilled personnel and reliable infrastructure.
The availability of lithium and nickel-bearing resources, as well as the ability to secure imported mineral concentrates at competitive prices, will influence the commercial success of the proposed facilities.
Environmental considerations will also remain important. Mineral processing can involve substantial energy and water requirements, along with the generation of industrial waste. Companies will therefore need to adopt responsible extraction, processing and waste-management practices.
The government’s support programme is expected to help reduce the initial financial burden associated with setting up large-scale facilities. Competitive bidding may also encourage companies to develop projects with greater cost efficiency.
The five-year implementation period provides an opportunity for selected beneficiaries to establish infrastructure, introduce processing technologies and gradually build production capabilities.
For domestic manufacturers, the development of these facilities could eventually improve access to processed materials and support the expansion of battery and electric mobility industries.
The initiative comes at a time when countries across the world are placing greater emphasis on securing supplies of minerals required for advanced manufacturing and the energy transition.
With demand for batteries and energy storage technologies expected to remain an important driver of industrial investment, strengthening the domestic processing ecosystem has become a strategic economic priority for India.
The success of the scheme will ultimately depend on how effectively the selected companies implement their projects, secure raw materials and establish commercially sustainable operations.
If implemented successfully, the programme could mark an important step towards reducing India’s dependence on imported critical mineral products while creating new opportunities for domestic manufacturing, technology development and industrial investment.