New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Capex Support Scheme to Promote Critical Mineral Processing with a total financial outlay of ₹2,814 crore over five years. The scheme aims to strengthen India’s domestic critical mineral processing capabilities, reduce dependence on imports and develop a resilient supply chain for minerals such as lithium and nickel.
The scheme will be implemented during the financial years 2026-27 to 2030-31 and will provide targeted capital expenditure support for establishing and operationalising domestic critical mineral processing facilities.
The initiative is expected to promote value addition within the country and strengthen India’s position across the critical mineral value chain. It will also support key sectors, including electric mobility, Battery Energy Storage Systems (BESS), electronics, defence and speciality steel.
Why Has the Government Approved the Critical Mineral Processing Scheme?
The processing of critical minerals is currently concentrated in a limited number of countries, making global supply chains vulnerable to geopolitical disruptions, price volatility and potential supply restrictions. These challenges pose risks to India’s economic security, national security and long-term industrial development. They may also affect the country’s efforts to achieve its decarbonisation targets.
India continues to depend substantially on imports for refined intermediates and high-purity materials because its domestic beneficiation and critical mineral processing infrastructure is still at an early stage of development.
Domestic processing capacity for minerals such as lithium, nickel and cobalt remains limited. Commercial-scale projects also face several challenges, including high capital investment requirements, limited access to suitable technologies and constraints in the availability of raw materials.
Against this backdrop, the government has introduced the scheme to encourage investment in domestic processing infrastructure, promote import substitution and establish resilient end-to-end critical mineral value chains.
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₹2,814 Crore Outlay for Lithium and Nickel Processing Plants
The scheme has a total financial outlay of ₹2,814 crore and will remain operational from FY 2026-27 to FY 2030-31.
Under the initiative, the government will provide a capital subsidy of 30% of eligible investment for establishing four critical mineral processing plants.
These facilities will include:
- Two Lithium Processing Plants: Each plant will have a minimum processing capacity of 30 kilotonnes (kt).
- Two Nickel Processing Plants: Each plant will have a minimum processing capacity of 50 kilotonnes (kt).
The scheme is designed to support the processing of lithium and nickel ores and intermediary products into high-purity compounds. Cobalt is also expected to be recovered as a by-product of nickel production.
Capital Subsidy and Financial Support Under the Scheme
To encourage investment in domestic processing facilities, the government has set separate maximum capital support limits for lithium and nickel processing projects.
The financial assistance will be provided as follows:
- Lithium Processing: Maximum capital support of ₹500 crore per beneficiary.
- Nickel Processing: Maximum capital support of ₹900 crore per beneficiary.
- Capital Subsidy: 30% of the eligible investment.
The financial support is intended to reduce the initial investment burden on companies and encourage the establishment of commercial-scale processing facilities in India.
How Will Beneficiaries Be Selected?
The government will follow a two-stage selection process to identify beneficiaries under the Critical Mineral Processing Scheme.
In the first stage, applications will be evaluated for technical qualifications. Only applicants meeting the prescribed technical criteria will be eligible to participate in the second stage. The second stage will involve financial bidding. For each mineral, two beneficiaries will be selected based on the least-cost criterion. This means applicants seeking the lowest capital expenditure support from the government will be given preference.
The incentives will be disbursed in three tranches, linked to the achievement of specified milestones under the scheme.
Scheme to Strengthen India’s Critical Mineral Value Chain
The scheme is expected to strengthen domestic capabilities in processing critical minerals and reduce India’s dependence on overseas suppliers for high-purity materials. The development of domestic lithium and nickel processing facilities will support industries that rely on these minerals, particularly electric mobility, battery manufacturing, energy storage, electronics, defence and speciality steel.
By encouraging private investment and promoting domestic value addition, the initiative is expected to improve supply chain resilience and create a stronger industrial ecosystem for critical minerals.
Boost to Atmanirbhar Bharat Initiative
The approval of the ₹2,814 crore Capex Support Scheme marks an important step towards advancing the objectives of Atmanirbhar Bharat.
By supporting domestic processing infrastructure, the government aims to strengthen India’s economic and strategic security, promote import substitution and develop a reliable critical mineral supply chain.
The initiative will also help build domestic capabilities across the critical mineral value chain, supporting India’s long-term industrial growth and clean energy transition.
