The Union Cabinet has approved a $296.05 million Capital Expenditure Support Scheme to Promote Critical Mineral Processing, marking a significant step towards strengthening India’s domestic mineral processing industry and reducing dependence on imported critical minerals.
The scheme, approved under the leadership of Prime Minister Narendra Modi, will be implemented over five years, from FY2027 to FY2031. It aims to establish domestic processing capabilities for strategically important minerals, particularly lithium and nickel, while developing resilient supply chains to support India’s growing industrial and technological requirements.
Under the initiative, the government will provide capital subsidies covering 30% of eligible investments for establishing four critical mineral processing facilities. These will include two lithium processing plants, each with a minimum capacity of 30,000 tonnes, and two nickel processing plants, each with a minimum capacity of 50,000 tonnes. Nickel processing is also expected to facilitate the recovery of cobalt as a by-product, further strengthening domestic mineral availability.
The financial assistance will be subject to specified limits for individual beneficiaries. Each lithium processing project will be eligible for maximum capital support of $52.60 million, while nickel processing beneficiaries can receive up to $94.69 million each. The funding structure is designed to encourage private investment in capital-intensive processing infrastructure and improve the commercial viability of domestic projects.
Beneficiaries will be selected through a two-stage competitive process involving technical qualification followed by financial bidding. Two beneficiaries will be selected for each mineral based on the least-cost criterion. Financial incentives will be released in three instalments linked to the achievement of predefined project milestones, ensuring that government support is aligned with implementation progress.
The scheme is expected to benefit several strategically important sectors, including electric mobility, battery energy storage systems (BESS), electronics, defence and speciality steel. Lithium and nickel are essential inputs for advanced battery technologies and various industrial applications, making their domestic processing increasingly important as India expands its electric vehicle ecosystem and clean energy infrastructure.
India’s dependence on imported critical minerals remains a key challenge for its manufacturing ambitions and energy transition. By encouraging domestic processing capacity, the government aims to improve supply chain security, promote value addition within the country and reduce exposure to international supply disruptions and price volatility.
The initiative also supports the broader objectives of Atmanirbhar Bharat by encouraging private-sector participation, attracting investments in advanced mineral processing technologies and creating a stronger domestic industrial ecosystem.
With a targeted investment framework and milestone-based financial support, the scheme represents an important policy intervention in India’s efforts to secure critical mineral resources. Its successful implementation could strengthen the country’s position in the global battery and advanced manufacturing supply chain while supporting long-term economic growth and strategic self-reliance.
