Cabinet Clears ₹2,814 Cr Scheme To Boost Lithium & Nickel Processing

With an eye on reducing dependence on imported critical minerals, the Union Cabinet has approved a scheme to set up domestic lithium and nickel processing facilities in the country. 

Called the Capex Support Scheme to Promote Critical Mineral Processing, the programme has been approved with a financial outlay of ₹2,814 Cr over a period of five years from FY27 to FY31. 

The outlay will pave the way for setting up four plants, two each for lithium and nickel processing. In a statement, the government said that the units will process lithium and nickel ores or intermediary products into high-purity compounds. Cobalt is also expected to be recovered as a by-product of nickel production.

Under the scheme, beneficiaries will receive milestone-linked capital subsidies covering 30% of their eligible investment, subject to certain thresholds. For lithium processing, support will be capped at ₹500 Cr per beneficiary. However, each of the two proposed lithium plants should have a minimum capacity of 30 kilo-tonnes.

For nickel processing, the maximum support will be ₹900 Cr per beneficiary, with each plant required to have a minimum capacity of 50 kilo-tonnes.

The scheme focuses on processing, rather than mining alone. This strategy aims to retain more value within India by converting raw materials into compounds, which are required by downstream industries.

The government said that the resulting capacity would support use cases across electric mobility, battery energy storage systems (BESS), electronics, defence and speciality steel.

“The scheme aims to develop domestic processing capabilities in India to support value addition within the country, reduce import dependence, and develop (the) value chain… This will support critical sectors such as electric mobility, BESS, electronics, defence, speciality steel etc,” read an official statement.

The government also said that the applicants will be selected through a two-stage process. The first stage will assess technical qualifications, followed by financial bidding. The beneficiaries will be selected based on the least-cost criterion, meaning qualified seeking the lowest capital expenditure support will be chosen.

Afterwards, incentives will be disbursed in three tranches linked to specified milestones. With this, the government aims to tie payments to progress rather than providing the entire subsidy upfront.

Reducing India’s Export Exposure

Citing its rationale for approving the scheme, the government said that critical mineral processing remains concentrated in a small number of global locations. This, as per the Centre, has left supply chains exposed to geopolitical disruptions, price volatility and potential restrictions.

As of now, India remains 100% import-dependent for raw and refined forms of many critical minerals, including lithium, cobalt and nickel. These minerals are critical components for India’s clean energy transition, electric vehicles, electronics, and advanced manufacturing sectors. 

As such, the scheme intends to strengthen domestic value chains, curb imports and support decarbonisation initiatives. But the road ahead will be tricky and will also require beneficiaries to secure raw materials and processing capabilities.

This is the second such scheme approved by the Union Cabinet in the past year. In December 2025, the cabinet also cleared a ₹1,500 Cr incentive scheme to develop at least 270 kilotons of annual recycling capacity for critical minerals.

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