Cabinet Clears Rs 2,814-Crore Scheme To Boost Critical Mineral Processing In India

The Union Cabinet on Wednesday approved a Rs 2,814-crore scheme to boost domestic processing of critical minerals, aiming to reduce India's dependence on imports and strengthen its supply chain for minerals essential to electric vehicles, batteries, electronics and defence.

The Capex Support Scheme to Promote Critical Mineral Processing will be implemented over five years, from 2026-27 to 2030-31. It will provide financial assistance to companies setting up four processing plants focused on lithium and nickel.

India currently depends heavily on overseas suppliers for refined critical minerals and high-purity materials, as domestic processing capacity for lithium, nickel and cobalt remains limited. China accounts for more than 90 per cent of global processing capacity for certain critical minerals, including rare earths and battery-grade graphite. This concentration leaves international supply chains vulnerable to export restrictions, geopolitical disruptions and price volatility.

Under the scheme, the government will provide a capital subsidy of 30 per cent of eligible investment for setting up four plants. These will include two lithium processing facilities, each with a minimum capacity of 30 kilotonnes, and two nickel processing plants, each with a minimum capacity of 50 kilotonnes.

The maximum government support will be capped at Rs 500 crore per beneficiary for lithium projects and Rs 900 crore per beneficiary for nickel projects. Cobalt is also expected to be recovered as a by-product of nickel processing.

Companies will be selected through a two-stage process. Applications will first undergo technical evaluation, after which eligible companies will participate in financial bidding. Two beneficiaries will be selected for each mineral based on the least-cost criterion, giving preference to companies seeking the lowest capital support from the government. Financial assistance will be released in three instalments linked to project milestones.

The initiative is expected to strengthen India's critical mineral value chain by encouraging domestic processing and increasing value addition instead of relying on imported refined materials. Critical minerals are essential for India's electric mobility, battery energy storage systems, electronics, defence and speciality steel sectors. Building domestic processing capacity is also considered important for the country's energy transition and manufacturing ambitions.