The Union Cabinet approved a Rs 2,814-crore scheme to promote domestic processing of critical minerals, with subsidies for four lithium and nickel plants to reduce import dependence and strengthen India's mineral supply chain.India relies heavily on imports for refined critical minerals, as domestic processing capacity for lithium, nickel and cobalt remains limited. The Union Cabinet on Wednesday approved a Rs 2,814-crore scheme to promote critical mineral processing in India, with the aim of reducing import dependence and building domestic capacity in a sector dominated by a handful of countries, particularly China.China controls more than 90 per cent of global processing capacity for certain critical minerals, including rare earths and battery-grade graphite.
Such concentration leaves international supply chains vulnerable to geopolitical disruptions, export restrictions and price volatility, making the development of alternative processing hubs a strategic priority.India currently depends substantially on imports for refined intermediates and high-purity materials, as its domestic beneficiation and processing infrastructure for minerals such as lithium, nickel and cobalt remains at an early stage. High capital requirements, limited access to suitable technologies and constraints in raw material availability have also posed challenges to setting up commercial-scale processing facilities.The newly approved 'Capex support scheme to promote critical mineral processing' seeks to address these gaps by providing financial assistance for setting up domestic processing plants.
It will focus on converting lithium and nickel ores and intermediary products into high-purity compounds. Cobalt is also expected to be recovered as a by-product of nickel processing.
The initiative is expected to support sectors that rely on these minerals, including electric mobility, battery energy storage systems (BESS), electronics, defence and speciality steel.WHAT DOES THE SCHEME PROVIDE?The scheme has a total financial outlay of Rs 2,814 crore and will be implemented over five years, from the financial year 2026-27 to 2030-31. Under the programme, the government will provide a capital subsidy of 30 per cent of eligible investment for establishing four critical mineral processing plants.
These will include two lithium processing facilities, each with a minimum capacity of 30 kilotonnes, and two nickel processing plants, each with a minimum capacity of 50 kilotonnes.The maximum capital support has been capped at Rs 500 crore per beneficiary for lithium processing projects and Rs 900 crore per beneficiary for nickel processing projects.HOW WILL COMPANIES BE SELECTED?The selection of beneficiaries will take place through a two-stage process. Applications will first be assessed for technical qualifications, with only eligible applicants allowed to participate in the subsequent financial bidding.For each mineral, two beneficiaries will be selected based on the least-cost criterion, meaning preference will be given to bidders seeking the lowest capital expenditure support from the government.The financial assistance will be released in three instalments, linked to the achievement of specified project milestones.The scheme is aimed at strengthening India's position across the critical mineral value chain by encouraging domestic processing, increasing value addition and reducing dependence on overseas suppliers.
It is also expected to improve the resilience of supply chains for minerals that are increasingly important to India's energy transition, manufacturing and strategic industries.- Ends