The Union Cabinet has approved a ₹2,814 crore capital expenditure support scheme to strengthen India's domestic processing capacity for critical minerals, particularly lithium and nickel. The decision, announced on November 4, 2026, aims to reduce dependence on imported refined materials and encourage investment in processing facilities within the country.
The scheme, titled the Capex Support Scheme to Promote Critical Mineral Processing, will operate over five financial years, from 2026–27 to 2030–31. It is designed to support the establishment and operation of four processing plants: two for lithium and two for nickel.
Editorial Insight
Key Highlights
Important points readers should notice.
Issue/Event: Cabinet approves a ₹2,814 crore scheme to promote domestic lithium and nickel processing.
Location: India.
Authority/Organisation: Union Cabinet and Government of India.
Action Taken: Approved capital support for four proposed processing plants through a competitive selection process.
- Impact: The scheme aims to increase domestic value addition and reduce dependence on imported processed critical minerals.
Under the approved framework, the government will provide capital subsidies covering 30% of eligible investment. The proposed lithium facilities will each have a minimum processing capacity of 30,000 tonnes, while the two nickel facilities will each have a minimum capacity of 50,000 tonnes.
The maximum capital support will be capped at ₹500 crore for each lithium beneficiary and ₹900 crore for each nickel beneficiary. The support is intended to reduce the high initial investment burden faced by companies entering the critical-mineral processing sector.
The government has also outlined a competitive selection process for companies seeking assistance. Applications will first undergo technical assessment. Only applicants meeting the technical requirements will proceed to financial bidding.
Editorial Analysis
Why This Matters
Critical minerals are essential inputs for modern manufacturing, clean-energy technologies and strategic industries. Dependence on imported refined materials can expose manufacturers to international supply disruptions, price fluctuations and geopolitical restrictions. Developing domestic processing facilities could help India retain more value within its industrial economy. It may also create opportunities for companies involved in mineral processing, engineering, technology development and battery-material manufacturing. The scheme is significant because it addresses a gap between mineral availability and the ability to process those resources into high-purity materials required by manufacturers. However, financial support alone cannot guarantee supply-chain independence. Access to raw materials, advanced processing technology, environmental safeguards and commercially viable operations will also determine the outcome.
For each mineral, two beneficiaries will be selected according to the least-cost criterion, meaning companies seeking the lowest capital support for their eligible projects will be considered. The approved incentives will be released in three instalments linked to the achievement of specified project milestones.
The scheme is focused on processing lithium and nickel ores or intermediate products into high-purity compounds. Cobalt is also expected to be recovered as a by-product of nickel processing, potentially strengthening domestic availability of another important battery and industrial material.
These minerals are important for several strategic industries. Lithium and nickel are widely used in battery technologies, electric vehicles and energy-storage systems. Cobalt is also used in certain battery chemistries, while critical-mineral materials are relevant to electronics, defence manufacturing and specialised steel production.
India currently remains substantially dependent on imports for refined intermediates and high-purity materials. Domestic beneficiation and processing infrastructure is still at an early stage, according to the government's assessment. Commercial-scale projects face challenges such as high capital costs, limited access to suitable technology and constraints in securing consistent supplies of raw materials.
The concentration of critical-mineral processing in a limited number of countries also creates risks for manufacturers. Geopolitical tensions, export restrictions and international price volatility can disrupt supply chains and affect industries dependent on imported materials.
The new scheme is intended to encourage domestic value addition rather than relying primarily on imported processed materials. By supporting processing infrastructure, the government aims to strengthen the wider supply chain connecting mineral resources, refining, advanced materials and manufacturing.
The initiative is also relevant to India's electric mobility and renewable-energy ambitions. Battery storage systems, electric vehicles and electronics manufacturing require dependable access to processed materials. Greater domestic processing capacity could help manufacturers build more resilient supply arrangements over time.
However, the Cabinet approval does not mean that four plants have already been constructed or that production has begun. Companies must first qualify under the scheme, participate in the selection process, secure support and complete their projects. Actual production capacity will depend on investment decisions, project execution and access to suitable raw materials.
The five-year scheme represents a policy push to attract private-sector participation in a strategically important industrial segment. Its effectiveness will ultimately depend on how quickly projects are selected, commissioned and brought into commercial operation.
