Cabinet Approves Rs.2,814 Crore Scheme for Lithium and Nickel Processing

The [Union Cabinet](/topic/union-cabinet), chaired by Prime Minister [Narendra Modi](/topic/narendra-modi), has approved a landmark initiative known as the ‘Capex Support Scheme to Promote Critical Mineral Processing’ with a substantial financial outlay of Rs.2,814 crore over the next five years. This scheme is designed to bolster India's domestic processing capabilities for critical minerals, specifically lithium and nickel, which are vital for various sectors including electric mobility and [battery](/topic/electric-vehicles) energy storage systems.

The global supply chains for critical minerals are heavily concentrated in a limited number of regions, exposing them to geopolitical disruptions and price volatility. This concentration poses significant threats not only to supply chain resilience but also to national security and economic sovereignty. The Indian government recognizes that dependence on imports for refined intermediates and high-purity materials is unsustainable, especially as the country aims to achieve its decarbonization targets.

Currently, India relies heavily on imports for critical minerals, with domestic processing capacity remaining limited. The nascent stage of India's beneficiation and processing infrastructure for lithium, nickel, and cobalt has resulted in challenges such as high capital requirements and constrained access to raw materials. The new scheme aims to address these challenges by providing targeted capital expenditure support for the establishment and operationalization of domestic processing facilities.

The primary goal of the Capex Support Scheme is to develop robust domestic processing capabilities that will facilitate value addition within India, reduce import dependence, and create a resilient end-to-end value chain for critical minerals. 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 anticipated to significantly support critical sectors such as electric mobility, battery energy storage systems, electronics, and specialty steel.

The scheme outlines a financial outlay of Rs.2,814 crore, with a structured timeline from FY 2026-27 to 2030-31. Under this scheme, a capital subsidy of 30% of eligible investment will be provided for setting up four critical mineral processing plants: two lithium processing plants with a minimum capacity of 30 kilotons each and two nickel processing plants with a minimum capacity of 50 kilotons each. The maximum capital support is capped at Rs.500 crore per lithium beneficiary and Rs.900 crore per nickel beneficiary.

The selection of beneficiaries under the Capex Support Scheme will be conducted through a two-stage process. Initially, applications will be assessed for technical qualifications, ensuring that only technically proficient applicants proceed to the financial bidding stage. For each mineral, two beneficiaries will be selected based on the least-cost criterion, meaning the lowest capital expenditure support sought by the bidders will be prioritized. The incentives will be disbursed in three tranches, linked to the achievement of specified milestones, ensuring accountability and progress.

This initiative is a crucial step towards advancing the objectives of Atmanirbhar Bharat, the Indian government's vision for self-reliance. By supporting the development of resilient domestic processing infrastructure, the scheme aims to strengthen India's capabilities across the critical mineral value chain. The establishment of these processing facilities is expected to create jobs, stimulate local economies, and enhance India's position in the global market for critical minerals.

The Capex Support Scheme is not only a strategic move to enhance domestic capabilities but also a proactive measure to mitigate the risks associated with global supply chain dependencies. As India seeks to position itself as a leader in the critical minerals sector, this initiative could pave the way for sustainable growth and innovation in various industries.

In conclusion, the Cabinet's approval of the Capex Support Scheme marks a significant milestone in India's journey towards self-sufficiency in critical mineral processing. By investing in domestic capabilities, the government aims to secure economic sovereignty, enhance national security, and contribute to global decarbonization efforts.