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

The Union Cabinet approved the Capex Support Scheme to Promote Critical Mineral Processing. It will spend ₹2,814 Cr over five years, from FY27 to FY31. The scheme is designed to build domestic facilities for processing lithium and nickel, rather than relying entirely on overseas suppliers.

The programme will support four plants: two for lithium and two for nickel. These facilities will turn ores or intermediary products into high-purity compounds. Cobalt may also be recovered as a by-product of nickel processing. Beneficiaries will receive capital subsidies linked to investment and progress.

The wider aim is to retain more value in India, curb imports and strengthen supply chains. The resulting materials could support electric mobility, battery energy storage, electronics, defence and speciality steel. The scheme also supports India’s clean-energy transition by developing domestic processing capabilities.

Critical mineral processing is the industrial step that converts mined ores or intermediary products into high-purity compounds. These compounds can then be supplied to industries that make batteries, electronics, defence products and other technologies. The article focuses on lithium and nickel, with cobalt potentially recovered during nickel production.

Mining is different. It removes mineral-bearing material from the ground, but does not necessarily produce a refined, usable chemical compound. For example, a supported plant could take lithium ore or an intermediary product and process it into a high-purity lithium compound. A nickel plant could do the same for nickel and recover cobalt as a by-product.

This distinction matters because India wants to capture more value domestically. Building processing capacity can reduce reliance on imported raw and refined minerals. It also gives downstream industries a stronger local supply base, although companies must still secure raw materials and suitable processing capabilities.

The scheme has a total financial outlay of ₹2,814 Cr over five years, from FY27 to FY31. It is intended to support four domestic plants: two for lithium processing and two for nickel processing. The facilities will process ores or intermediary products into high-purity compounds.

Each lithium plant must have a minimum capacity of 30 kilotonnes. Lithium support is capped at ₹500 Cr per beneficiary. Each nickel plant must have a minimum capacity of 50 kilotonnes, while support for nickel is capped at ₹900 Cr per beneficiary. Subsidies will cover 30% of eligible investment, subject to thresholds.

These figures set both the programme’s scale and its eligibility floor. The capacity rules encourage sizeable facilities rather than small projects. The investment caps limit each beneficiary’s support, while the overall outlay funds the wider programme across its five-year period.

Applicants will be selected through a two-stage process. First, the government will assess technical qualifications. Applicants that clear this stage will enter financial bidding. Beneficiaries will be chosen using the least-cost criterion, meaning qualified applicants seeking the lowest capital expenditure support will be selected.

The subsidy will cover 30% of eligible investment, subject to thresholds. It will not arrive as one upfront payment. Instead, incentives will be released in three tranches linked to specified milestones. A company must therefore reach agreed stages of project development before receiving each payment.

This structure ties public money to measurable progress. It is intended to reduce the risk of paying the entire subsidy before plants are built or operational steps are completed. The approach also lets the government monitor implementation while encouraging selected companies to deliver the promised facilities and capacities.

If lithium and nickel processing expands inside India, the country could rely less on imported raw and refined minerals. Domestic plants would convert ores or intermediary products into high-purity compounds. That would retain more value within India instead of sending processing activity overseas.

For example, locally processed lithium and nickel could supply electric mobility and battery energy storage systems. The capacity could also support electronics, defence and speciality steel. Nickel processing may additionally recover cobalt as a by-product, potentially strengthening the domestic critical-mineral value chain.

The article says India is currently 100% import-dependent for raw and refined forms of many critical minerals, including lithium, cobalt and nickel. New plants could make supply chains more resilient and support decarbonisation. However, beneficiaries still need to secure raw materials and processing capabilities, so expansion will not remove every supply challenge.

Global supplies of lithium, nickel and cobalt are vulnerable because critical-mineral processing remains concentrated in a small number of locations. When many countries or industries depend on those few processing centres, a disruption in one location can affect wider supply chains.

The government identified three linked risks: geopolitical disruptions, price volatility and possible restrictions. A political conflict or policy change could interrupt flows. Sharp price movements could raise costs for manufacturers. Export restrictions could limit access even when minerals exist elsewhere. These risks matter for sectors that use critical minerals.

India is especially exposed because it remains 100% import-dependent for raw and refined forms of many critical minerals, including lithium, cobalt and nickel. The approved scheme is intended to build domestic processing and reduce that exposure. Its success will depend partly on whether beneficiaries can secure raw materials and the required processing capabilities.

Lithium, nickel and cobalt are chemical elements that can be processed into compounds for industrial use. The article identifies them as critical minerals and links them to electric mobility, battery energy storage, electronics, defence and advanced manufacturing. It does not explain their chemical properties in detail.

Using established scientific knowledge, lithium is very light and helps batteries store electrical energy. Nickel can increase battery energy density and is also useful in alloys and specialised materials. Cobalt helps stabilise some battery chemistries and supports reliable cycling. Their usefulness comes from how their atoms and compounds store, conduct or withstand energy and heat.

These properties make reliable supplies important for modern technologies. India currently imports raw and refined forms of many such minerals, including lithium, nickel and cobalt. The new scheme focuses on processing them domestically, while companies will still need secure raw materials and suitable facilities.