NEW DELHI, Nov. 4: The Centre is considering a new capital expenditure support scheme worth Rs 2,800 crore to strengthen domestic production and processing of critical minerals, as India seeks to reduce its dependence on foreign suppliers and secure essential raw materials for its rapidly expanding clean energy and manufacturing industries.
The proposed initiative is expected to focus on minerals such as lithium, nickel and cobalt, which are important components in the production of lithium-ion batteries used in electric vehicles, smartphones, energy storage systems and several other electronic products.
The proposal comes at a time when governments and industries across the world are competing to secure reliable supplies of minerals required for the transition towards cleaner energy technologies. India’s growing requirements for battery materials have increased the importance of developing domestic capabilities across mining, refining and processing operations.
According to the proposal reported on Wednesday, the government is examining ways to encourage investment in critical mineral-related infrastructure through targeted capital expenditure assistance. The proposed financial support is intended to improve the commercial viability of projects and encourage companies to establish or expand domestic facilities.
Critical minerals have become an important part of India’s industrial and economic planning because several emerging sectors depend on their uninterrupted availability. Electric vehicle manufacturers, battery producers, renewable energy companies, electronics manufacturers and defence-related industries require specialised materials to maintain production and meet future demand.
Lithium, in particular, has gained strategic importance because of its role in rechargeable battery technology. It is used in battery cells that power electric cars, two-wheelers, portable electronic devices and stationary storage systems.
Nickel is another important material used in several battery chemistries, particularly those designed to provide higher energy density. Cobalt is also used in certain lithium-ion battery formulations to improve stability and performance.
The availability and affordability of these minerals can therefore influence the cost of batteries and the competitiveness of industries dependent on them.
India’s domestic manufacturing ambitions have increased the urgency of establishing a stronger supply chain for such materials. Although the country has expanded its renewable energy and electric mobility programmes, a significant part of its mineral processing and battery material requirements continues to depend on international markets.
The proposed scheme is expected to address some of these structural limitations by encouraging investment in domestic production and processing capacity.
The focus on capital expenditure is particularly significant because critical mineral projects require substantial initial investment. Mining operations involve exploration, infrastructure development, environmental clearances and specialised equipment, while processing facilities require advanced technology and skilled manpower.
Such projects can also take several years to become commercially operational. The high initial costs and uncertainty surrounding mineral availability can discourage private companies from making large investments without adequate policy support.
A targeted government assistance programme could help reduce some of these financial risks and encourage businesses to participate in the sector.
The proposed support may also help attract investment into mineral processing, an area that is essential for converting extracted resources into materials suitable for industrial use.
Mining alone cannot guarantee a secure supply chain because raw minerals often require several stages of treatment and refining before they can be used in battery manufacturing.
Developing domestic processing facilities would enable India to retain a larger share of the value generated across the mineral supply chain. It could also create opportunities for technology partnerships, research institutions and specialised manufacturing companies.
The proposal assumes greater importance as India continues to expand its electric vehicle market. Government incentives, improvements in charging infrastructure and growing consumer awareness have encouraged automobile manufacturers to increase their electric mobility offerings.
However, the availability of affordable batteries remains one of the major factors influencing the overall cost of electric vehicles.
Battery costs depend on several elements, including raw material prices, processing expenses, manufacturing technology and economies of scale. Greater domestic availability of essential minerals could help manufacturers reduce their exposure to international supply disruptions and price fluctuations.
A stronger domestic supply chain could also support the development of battery recycling facilities, allowing valuable materials to be recovered from used batteries and returned to the manufacturing cycle.
Recycling is increasingly viewed as an important component of long-term mineral security because it can reduce pressure on newly extracted resources and improve the efficient use of available materials.
India’s electronics industry could also benefit from improved access to critical minerals. Smartphones, laptops, telecommunications equipment and other electronic products depend on sophisticated battery systems and specialised materials.
As domestic electronics manufacturing expands, the demand for reliable supplies of industrial inputs is expected to increase.
The proposed financial assistance could therefore have implications beyond the automobile sector, supporting a wider range of manufacturing activities.
Another important consideration is the concentration of global mineral production and processing capacity in a limited number of countries. Such concentration can create supply risks, particularly when trade restrictions, geopolitical tensions or transportation disruptions affect international markets.
For India, excessive dependence on overseas suppliers can expose manufacturers to unpredictable prices and shortages.
The government has increasingly emphasised the need to diversify mineral sourcing arrangements while improving domestic exploration and production.
The National Critical Mineral Mission, approved by the Union Cabinet in January 2025 with an expenditure of Rs 16,300 crore and expected investment of Rs 18,000 crore from public-sector undertakings and other stakeholders, represents a broader effort to strengthen India’s critical mineral ecosystem.
The mission covers several stages of the supply chain, including exploration, mining, processing, recovery from secondary sources and overseas acquisition of mineral assets.
The proposed Rs 2,800-crore capex scheme would add another potential layer of support to these efforts, particularly by addressing investment requirements in domestic facilities.
Industry participation will be essential for the success of the initiative. Private companies possess important technical capabilities and can contribute investment, research and operational expertise.
However, investors will also assess the availability of mineral deposits, regulatory procedures, project timelines, infrastructure requirements and long-term commercial demand before committing funds.
Clear policy guidelines and predictable approval mechanisms will therefore be important in attracting investment.
Environmental considerations will also remain central to the development of the sector. Mining and mineral processing can involve significant land, water and energy requirements, making responsible production practices necessary.
Companies will need to adopt appropriate environmental safeguards, efficient water management systems and transparent waste-disposal procedures to ensure that industrial expansion does not create unacceptable ecological costs.
The development of domestic processing technology will be another important priority. India will need skilled workers, research facilities and collaboration between industry and academic institutions to build capabilities in advanced mineral refining and battery materials.
The proposed scheme could create opportunities for technology transfer and domestic innovation if financial support is linked with measurable improvements in manufacturing capacity.
For smaller businesses, participation in the supply chain could also generate opportunities in equipment manufacturing, engineering services, transportation, testing and specialised industrial support.
The government will need to ensure that the proposed assistance encourages productive investment rather than merely subsidising existing operations.
As India pursues its clean energy and manufacturing objectives, access to critical minerals is becoming an important element of economic competitiveness.
The proposed Rs 2,800-crore initiative reflects the growing recognition that domestic energy transition ambitions must be supported by a reliable industrial supply chain.
If implemented effectively, the scheme could encourage new investment, strengthen mineral processing capabilities and reduce vulnerabilities arising from international supply disruptions.
The ultimate impact, however, will depend on the final policy structure, the projects selected for assistance and the ability of companies to translate financial support into commercially sustainable production.
For India, building a dependable critical mineral ecosystem is no longer only a question of securing raw materials. It is also about developing domestic technology, creating manufacturing opportunities and strengthening the country’s position in the global clean energy economy.