Govt Approves ₹2,814 Cr Scheme To Boost Domestic Critical Mineral Processing

The Union Cabinet on Wednesday approved a ₹2,814-crore scheme to promote domestic processing of critical minerals, including lithium and nickel, as the government looks to reduce India's dependence on imported refined materials and strengthen supply chains for strategic sectors.

The 'Capex Support Scheme to Promote Critical Mineral Processing', approved at a Cabinet meeting chaired by Prime Minister Narendra Modi, will run for five years, from the financial year 2026-27 to 2030-31.

Under the scheme, the government will provide capital subsidies amounting to 30% of eligible investments for setting up four critical mineral processing plants. These will include two lithium processing plants, each with a minimum capacity of 30 kilotonnes (kt), and two nickel processing plants, each with a minimum capacity of 50 kt.

The maximum capital support has been capped at ₹500 crore per beneficiary for lithium processing plants and ₹900 crore per beneficiary for nickel processing plants.

Announcing the Cabinet decision, Modi said India should not depend on other countries for processing the critical minerals needed for future technologies.

In a post on X, the Prime Minister said lithium, nickel and cobalt were essential for electric vehicles, batteries, electronics and defence, while India remained heavily dependent on imports of refined materials.

He said the scheme would support the establishment of new critical mineral processing plants, provide capital subsidies to encourage investment, increase domestic value addition and strengthen supply chains.

"The principle is clear...India must have capabilities to build technologies of the future," Modi wrote.

As per PIB release, the scheme is intended to address the limited domestic capacity for processing critical minerals, with commercial-scale projects facing challenges such as high capital requirements, limited access to suitable technologies and constraints in the availability of raw materials.

The government said the processing of critical minerals remains concentrated in a few global locations, exposing supply chains to geopolitical disruptions, price volatility and possible restrictions on supplies. Such vulnerabilities, it added, have implications for national security, economic security and India's decarbonisation targets.

The scheme will focus on processing lithium and nickel ores and intermediary products into high-purity compounds. Cobalt is also expected to be recovered as a by-product of nickel production.

These materials are used in sectors such as electric mobility, battery energy storage systems (BESS), electronics, defence and speciality steel.

How Will Beneficiaries Be Selected?

The selection of beneficiaries will follow a two-stage process. Applicants will first be assessed for technical eligibility, after which qualified bidders will participate in financial bidding.

Two beneficiaries will be selected for each mineral based on the least-cost criterion, meaning preference will be given to bidders seeking the lowest capital support from the government.

The incentives will be disbursed in three tranches, linked to the achievement of specified milestones.

The government said the initiative would support domestic value addition, encourage import substitution and help establish more resilient supply chains for critical minerals.

It is also being positioned as part of the Centre's broader Atmanirbhar Bharat push to develop domestic capabilities in sectors considered important for India's future industrial and technological requirements.