Cabinet approves Rs 2,814 Cr scheme to promote processing of lithium, nickel

The Union Cabinet approved a capex support scheme to build domestic processing capacity for lithium and nickel. It aims to keep more value addition inside India, reduce dependence on imported refined materials, and strengthen the country’s critical-mineral value chain. Prime Minister Narendra Modi chaired the meeting where the decision was taken.

The scheme will support facilities that process lithium and nickel ores or intermediary products into high-purity compounds. It will provide a capital subsidy equal to 30% of eligible investment. Four plants are planned: two for lithium and two for nickel. Cobalt may also be recovered as a by-product of nickel production.

The scheme has a total outlay of Rs 2,814 crore and will be implemented from 2026-27 to 2030-31. It is intended to support sectors including electric mobility, battery energy storage, electronics, defence, and speciality steel. The broader goal is stronger domestic supply-chain resilience.

The scheme’s overall financial outlay is Rs 2,814 crore over five years. Its planned physical scale is four critical-mineral processing plants. Two plants will process lithium, and two will process nickel. This gives India a targeted start in areas where domestic commercial-scale processing remains limited.

Support will come as a capital subsidy covering 30% of each beneficiary’s eligible investment. A lithium project can receive a maximum of Rs 500 crore. A nickel project can receive up to Rs 900 crore. The caps limit the government’s support for each individual plant, even when eligible investment is larger.

The different limits reflect the scheme’s stated design for these two minerals. Nickel projects may receive higher maximum support under the programme. Together, the plants are expected to produce high-purity compounds and potentially recover cobalt from nickel production, supporting batteries, electric mobility, electronics, defence, and speciality steel.

Mineral processing is the set of steps that makes a mined mineral more concentrated, usable, and suitable for industry. It separates valuable material from unwanted material and prepares the product for later manufacturing. In this scheme, processing means taking lithium or nickel ores, or intermediate products, and producing high-purity compounds.

For example, a plant could receive a lithium-bearing ore or an intermediary material and deliver a purified lithium compound. A nickel facility would similarly produce a high-purity nickel compound. The article also expects cobalt to be recovered as a by-product of nickel production. The subsidy helps establish these domestic facilities.

This matters because India currently depends substantially on imports for refined intermediates and high-purity materials. Domestic processing can add value before materials reach battery, electronics, defence, or speciality-steel industries. It can also help develop an end-to-end value chain rather than leaving processing concentrated in a few global locations.

The subsidy is designed to reduce the upfront cost of building a domestic processing plant. For each approved beneficiary, the government will provide support equal to 30% of eligible investment. The subsidy applies to capital expenditure connected with setting up and operationalising the facility.

The support is capped separately by mineral. A lithium beneficiary can receive no more than Rs 500 crore. A nickel beneficiary can receive no more than Rs 900 crore. For example, 30% of a qualifying lithium project’s investment would be calculated, but the payment could not exceed Rs 500 crore. The same principle applies to nickel, with its higher ceiling.

The article does not specify further eligibility rules or payment stages. It does state that the scheme is intended to address high capital requirements and encourage commercial-scale plants. By sharing part of the initial investment, it seeks to make domestic processing more viable and reduce import dependence.

Critical minerals are materials considered important for economic development, national security, and modern clean-energy technologies. The article identifies lithium and nickel as targets for the new processing scheme. Cobalt is also relevant because it may be recovered as a by-product of nickel production. Their importance extends beyond mining to the industries that depend on reliable supplies.

The article connects these minerals with solar panels, electric vehicles, electronic devices, battery energy storage systems, defence, and speciality steel. It describes them as foundations of a modern, net-zero economy. Processing plants would turn ores or intermediary products into high-purity compounds needed by these sectors.

Supply is currently concentrated in a few global locations, making supply chains vulnerable to geopolitical tensions, price volatility, and export restrictions. India also imports refined intermediates and high-purity materials. Domestic processing could therefore support economic security, national security, and the timely delivery of decarbonisation goals.

If India expands domestic processing, it could import fewer refined intermediates and high-purity materials. That would support import substitution and keep more mineral value addition within the country. It could also reduce exposure to supply disruptions caused by geopolitical tensions, price volatility, or export restrictions in concentrated global processing locations.

The practical example is a domestic plant converting lithium or nickel ore into a high-purity compound. Those outputs could support electric mobility, battery energy storage systems, electronics, defence, and speciality steel. Cobalt recovered from nickel production could add another useful material. These links would strengthen an end-to-end domestic value chain.

The article presents the scheme as important for supply-chain resilience and decarbonisation, but it does not promise a specific import reduction or production increase. Plants still face high capital needs, technology constraints, and limited raw-material access. If those challenges are managed, domestic capacity could improve economic security and support clean-energy deployment.

A mineral value chain is the connected sequence from mineral resources and ores through beneficiation, processing, refined compounds, and the industries that use them. It links raw materials to products such as batteries, electronics, electric vehicles, defence equipment, and speciality steel. The article’s scheme focuses on strengthening the processing stage inside India.

For example, instead of sending a lithium or nickel ore elsewhere for processing and later importing a refined material, India could process it domestically into a high-purity compound. That step creates value through facilities, technology, skilled operations, and industrial supply links. Nickel processing may also recover cobalt as a by-product, adding another output.

India currently has limited domestic processing capacity and relies substantially on imports for refined intermediates and high-purity materials. Building plants could support import substitution and domestic value addition. It could also make supply chains more resilient, though high capital needs, technology availability, and raw-material access remain challenges.