The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a Rs 2,814 crore scheme to promote domestic processing of critical minerals, marking a significant step towards strengthening India’s strategic autonomy and reducing dependence on foreign suppliers for materials essential to future technologies.
The Capex Support Scheme to Promote Critical Mineral Processing will be implemented over five years, from the financial year 2026-27 to 2030-31. It aims to establish four domestic critical mineral processing plants through targeted capital subsidies to attract private investment and expand India’s processing capabilities.
Announcing the decision, Prime Minister Narendra Modi highlighted the strategic importance of developing domestic infrastructure for processing critical minerals, arguing that India cannot afford to depend on other countries for materials that power its future.
In a post on X on November 4, Modi pointed out that lithium, nickel and cobalt are essential for electric vehicles (EVs), batteries, electronics and defence, while India continues to depend heavily on imports of refined materials.
He emphasised that the scheme would support the establishment of new processing plants, encourage investment through capital subsidies, increase domestic value addition and strengthen supply chains.
According to the government, the concentration of critical mineral processing in a handful of countries exposes global supply chains to geopolitical disruptions, price volatility and potential export restrictions. Such vulnerabilities could affect India’s economic security, national security and decarbonisation ambitions.
Four processing plants to be established
Under the scheme, the government plans to support the establishment of four critical mineral processing facilities, comprising two lithium processing plants and two nickel processing plants.
Each lithium processing facility will have a minimum processing capacity of 30 kilotonnes (kt), while each nickel processing plant will have a minimum capacity of 50 kt.
The facilities will focus on processing lithium and nickel ores, along with intermediary products, into high-purity compounds required by advanced manufacturing industries. Cobalt is also expected to be recovered as a by-product of nickel production.
To encourage investment, the scheme provides a capital subsidy of 30 per cent of eligible investment. The maximum financial support will be capped at Rs 500 crore per lithium beneficiary and Rs 900 crore per nickel beneficiary.
The selection of beneficiaries will follow a two-stage process. Applicants will first undergo technical evaluation, with only technically qualified entities allowed to participate in financial bidding. Two beneficiaries for each mineral will be selected based on the least-cost criterion, favouring companies seeking the lowest capital expenditure support from the government.
Why domestic critical mineral processing matters
Critical minerals have emerged as strategic resources underpinning the global transition towards clean energy, advanced electronics, electric mobility and modern defence systems.
Lithium and nickel are important components of battery technologies, while cobalt is used in several battery chemistries and industrial applications. These materials also support the manufacturing of advanced electronics, energy storage systems and specialised industrial equipment.
However, securing access to mineral resources alone is insufficient. The ability to refine, process and convert raw minerals into high-purity materials is equally important for capturing greater economic value and developing domestic manufacturing ecosystems.
India’s processing infrastructure remains at a nascent stage, creating dependence on imported refined intermediates and high-purity materials. Limited access to suitable technologies, high initial capital requirements and constraints in raw material availability have also made commercial-scale processing projects challenging.
The new scheme seeks to address these bottlenecks by providing financial assistance for setting up domestic processing facilities. By expanding capabilities across the value chain, India aims to reduce import dependence, encourage private investment and strengthen its position in strategic manufacturing sectors.
Strengthening India’s critical mineral value chain
The scheme is expected to support several strategically important sectors, including electric mobility, battery energy storage systems (BESS), electronics, defence and speciality steel.
It also complements India’s broader efforts to build a resilient domestic critical mineral ecosystem, particularly as countries increasingly view access to these resources as an economic and national security priority.
The government’s emphasis on domestic processing reflects a larger strategic shift: moving beyond securing mineral supplies towards developing the technological and industrial capabilities required to process them within the country.
By supporting new processing facilities, the Rs 2,814 crore initiative seeks to advance the objectives of Atmanirbhar Bharat, promote domestic value addition and reduce vulnerabilities arising from concentrated global supply chains.
Ultimately, India’s ability to secure its technological future will depend not only on accessing critical minerals but also on developing the capacity to refine, process and transform them into the materials required by its industries.
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