Cabinet Approves ₹2,814-Crore Scheme to Boost Critical Mineral Processing in India
New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a ₹2,814-crore capital expenditure support scheme to strengthen India’s domestic critical mineral processing capabilities. The five-year initiative, titled the Capex Support Scheme to Promote Critical Mineral Processing, will be implemented from the financial year 2026-27 to 2030-31.
The scheme aims to reduce India’s dependence on imported critical minerals, encourage domestic value addition and build a resilient supply chain for minerals essential to electric vehicles, battery manufacturing, electronics, defence and other strategic industries.
30% Capital Subsidy for Four Processing Plants
Under the scheme, the government will provide a capital subsidy of 30% of eligible investment for establishing four critical mineral processing plants. These will include:
- Two lithium processing plants: Each with a minimum capacity of 30,000 tonnes.
- Two nickel processing plants: Each with a minimum capacity of 50,000 tonnes.
The maximum government support will be capped at ₹500 crore per lithium beneficiary and ₹900 crore per nickel beneficiary.
The facilities will focus on processing lithium and nickel ores, along with intermediate products, into high-purity materials suitable for industrial applications.
Cobalt Recovery to Strengthen Mineral Supply
An important feature of the scheme is the expected recovery of cobalt as a by-product of nickel processing. Lithium, nickel and cobalt are essential raw materials for lithium-ion batteries, electric vehicles and energy storage technologies.
By developing domestic processing infrastructure, India aims to strengthen its position across the critical mineral value chain and reduce vulnerabilities arising from concentrated global supply chains.
Transparent Selection and Incentive Mechanism
Beneficiaries will be selected through a two-stage process. Applications will first undergo technical evaluation, followed by financial bidding among technically qualified applicants.
For each mineral, two beneficiaries will be selected based on the least-cost criterion, meaning the lowest capital support sought from the government.
Financial incentives will be released in three instalments linked to the achievement of specified project milestones.
Boost for Electric Vehicles, Defence and Electronics
The initiative is expected to benefit several strategic sectors, including electric mobility, battery energy storage systems, electronics, defence equipment and speciality steel.
India currently depends substantially on imports for refined intermediates and high-purity materials derived from critical minerals. Limited domestic processing infrastructure, high investment requirements and technological challenges have restricted the development of commercial-scale facilities.
The new scheme is expected to encourage private investment, create domestic processing capacity, promote import substitution and strengthen India’s ambition of building self-reliant industrial supply chains under the Atmanirbhar Bharat initiative.
With global competition for lithium, nickel and cobalt intensifying, the ₹2,814-crore programme represents an important step towards strengthening India’s mineral security and supporting its long-term clean energy and manufacturing ambitions.