The [Union Cabinet](/topic/union-cabinet), led by Prime Minister Shri [Narendra Modi](/topic/narendra-modi), has approved a significant initiative aimed at enhancing India's capabilities in critical mineral processing. The 'Capex Support Scheme to Promote Critical Mineral Processing' is set to provide a financial outlay of ₹2,814 crore over five years, specifically targeting the processing of lithium and nickel. This strategic move comes in response to the growing concerns over supply chain vulnerabilities and the need for economic sovereignty in the face of global geopolitical tensions.
Addressing Supply Chain Vulnerabilities
The global supply chain for critical minerals, including lithium and nickel, is heavily concentrated in a few regions, exposing countries like India to risks associated with geopolitical disruptions and price volatility. According to official records reviewed by DotMR, this concentration poses severe threats to supply chain resilience and economic security. The Cabinet's decision underscores the importance of developing domestic processing capabilities to mitigate these risks and ensure a stable supply of essential materials for various industries.
India's current dependence on imports for refined intermediates and high-purity materials highlights the urgent need for domestic processing infrastructure. The nascent stage of India's beneficiation and processing capabilities has resulted in limited domestic processing capacity, particularly for critical minerals such as lithium, nickel, and cobalt. The new scheme aims to address these challenges by providing targeted capital expenditure support for the establishment and operationalisation of processing facilities.
Scheme Details and Financial Outlay
The 'Capex Support Scheme' is designed to foster the development of domestic processing capabilities, thereby supporting value addition within the country and reducing reliance on imports. The scheme specifically targets the processing of lithium and nickel ores into high-purity compounds, with cobalt expected to be recovered as a by-product of nickel production. This initiative is crucial for supporting critical sectors such as electric mobility, [Battery](/topic/electric-vehicles) Energy Storage Systems (BESS), electronics, defence, and specialty steel.
The financial outlay of ₹2,814 crore will be distributed over the scheme period from FY 2026-27 to 2030-31. Under this scheme, a capital subsidy of 30% of eligible investments will be provided for setting up four critical mineral processing plants: two lithium processing plants with a minimum capacity of 30 kilotonnes (kt) each, and two nickel processing plants with a minimum capacity of 50 kt each. The maximum capital support is capped at ₹500 crore per lithium beneficiary and ₹900 crore per nickel beneficiary.
Selection Process for Beneficiaries
The selection of beneficiaries for the scheme will follow a two-stage process. Initially, applications will be assessed for technical qualifications, ensuring that only technically qualified applicants proceed to the financial bidding stage. For each mineral, two beneficiaries will be selected based on the least-cost criterion, which involves evaluating the lowest capital expenditure support sought by bidders. This rigorous selection process aims to ensure that the scheme effectively allocates resources to the most capable and cost-efficient projects.
Incentives under the scheme will be disbursed in three tranches, linked to the achievement of specified milestones. This performance-based approach is intended to encourage timely project completion and operational efficiency, ultimately contributing to the establishment of a robust domestic processing infrastructure.
Implications for National Security and Economic Sovereignty
The approval of this scheme is a significant step towards advancing the objectives of Atmanirbhar Bharat, which aims to bolster India's self-reliance in critical sectors. By supporting the development of resilient domestic processing infrastructure, the scheme strengthens India's capabilities across the critical mineral value chain. This is particularly vital as the country seeks to achieve its decarbonisation targets and enhance its economic sovereignty.
The processing of critical minerals is not only essential for meeting domestic demand but also plays a crucial role in positioning India as a competitive player in the global market. As the world transitions towards greener technologies and sustainable energy solutions, the demand for lithium and nickel is expected to surge. By investing in domestic processing capabilities, India can secure its supply chains and reduce its vulnerability to external shocks.
In conclusion, the Cabinet's approval of the ₹2,814 crore Capex Support Scheme represents a proactive approach to addressing the challenges associated with critical mineral processing. By fostering domestic capabilities, India is taking significant strides towards ensuring economic security, enhancing national sovereignty, and supporting the transition to a sustainable future.
