CAPEX support scheme to promote critical mineral processing: A Rs 2,814-crore push for domestic lithium and nickel processing

India’s ambitions in electric mobility, battery storage and advanced manufacturing depend on reliable access to processed critical minerals. While securing mineral resources is essential, converting them into high-purity materials suitable for industrial use is an equally important part of the supply chain.

To strengthen this capability, the Union Cabinet on November 4, 2026, approved the CAPEX Support Scheme to Promote Critical Mineral Processing, with an outlay of ₹2,814 crore. The five-year scheme will support four domestic lithium and nickel processing plants and is expected to attract around ₹10,000 crore in investment.

What does the scheme aim to achieve?

The scheme seeks to establish domestic facilities that convert mineral feedstock into high-purity products needed by downstream industries. It focuses on lithium and nickel, helping fill a gap between access to raw materials and the manufacture of batteries, speciality steel and other products.

Lithium plants supported under the scheme will process ores and concentrates, excluding brines, into battery-grade products. Nickel plants will produce Class-1 nickel or battery-grade nickel sulphate, with cobalt recovery.

By providing capital expenditure support, the government aims to offset high upfront investment costs and improve project viability.

Why does India need domestic processing capacity?

Critical minerals are used in clean energy technologies, electronics, transport, telecommunications and defence. Their availability is also important to India’s target of achieving net-zero emissions by 2070.

However, processing capacity is concentrated in a few countries, exposing supply chains to geopolitical disruptions, price volatility and possible export restrictions. India largely depends on imports for refined intermediates and high-purity materials of key minerals.

Building domestic processing facilities can reduce this dependence, retain more value within the country and provide a more resilient supply base for manufacturers.

Such projects face substantial investment barriers. They require advanced equipment, multi-stage conversion systems and strict environmental safeguards. Limited access to suitable technologies, technical expertise and raw materials further complicates investment. The scheme is intended to help address these challenges.

How much financial support will be available?

The scheme will run from FY 2026–27 to FY 2030–31 and will be fully funded through Government of India budgetary support. It offers a capital subsidy of 30 per cent of eligible investment, subject to beneficiary-level limits.

Two lithium processing plants, each with a minimum capacity of 30,000 tonnes, will receive support of up to ₹500 crore per beneficiary. The total allocation for lithium processing is ₹1,000 crore.

For nickel, the scheme will support two plants with a minimum capacity of 50,000 tonnes each. Assistance is capped at ₹900 crore per beneficiary, bringing the total allocation for nickel processing to ₹1,800 crore.

Together, the four plants are expected to create 60,000 tonnes of lithium processing capacity and 1,00,000 tonnes of nickel processing capacity to meet projected demand by 2030.

Of the total ₹2,814-crore outlay, ₹2,800 crore is allocated for capital support and ₹14 crore for administrative expenses.

How will beneficiaries be selected?

Selection will take place through a competitive, two-stage process.

Applications will first undergo technical assessment. Only applicants meeting the technical criteria will proceed to financial bidding.

Qualified applicants will then compete on the amount of CAPEX support they seek. Selection will follow the least-cost criterion, favouring the lowest support sought. Two beneficiaries will be selected for each mineral, making four beneficiaries in total.

When will the subsidy be released?

Support will be disbursed in three stages, linked to investment, equity contribution and commissioning milestones.

The first tranche will release 25 per cent of the quoted subsidy once a beneficiary has spent 25 per cent of the committed CAPEX and contributed at least 15 per cent of the minimum required equity.

At the second stage, cumulative subsidy disbursement will reach 50 per cent of the quoted amount after 50 per cent of the committed CAPEX has been spent and at least 50 per cent of the minimum required equity has been contributed.

The remaining subsidy will be released after the plant is commissioned and the beneficiary has contributed 100 per cent of the minimum required equity, bringing cumulative disbursement to the full quoted amount.

What is the deadline for commissioning?

Beneficiaries are required to commission their plants within three years of receiving the Letter of Award.

If commissioning extends beyond three years, the remaining undisbursed support will be reduced through a tapering mechanism until the fifth year. Commissioning must, in all cases, be completed within five years of the award.

The structure links financial assistance to timely implementation.

Who will oversee the scheme?

A three-tier structure will manage selection, implementation and monitoring.

The Governing Council, chaired by the Secretary, Ministry of Mines, will provide strategic guidance, review progress, make the final selection of beneficiaries and sanction support. It can also approve changes to scheme guidelines, subject to the Union Mines Minister’s approval.

A Techno-Financial Committee will assess applications and recommend beneficiaries to the council. It will include technical and financial experts from research and development bodies, technical institutions and public sector undertakings.

A Project Management Agency will provide secretarial, managerial and implementation support and carry out tasks assigned by the Ministry.

Which industries could benefit?

High-purity processed materials from the supported plants are expected to strengthen supply chains for electric mobility, battery storage, electronics, defence and speciality steel.

Domestic processing would also support battery material and battery cell manufacturing, complementing existing downstream initiatives.

The anticipated benefits include import substitution, lower foreign exchange outgo, greater domestic value addition and direct and indirect employment. Further manufacturing of end-use products could generate additional jobs.

These are expected outcomes of the scheme and will depend on investment, commissioning and operation of the facilities.

How does it fit into India’s wider critical minerals strategy?

The processing scheme complements initiatives covering exploration, mining and recycling.

The National Critical Mineral Mission, launched in January 2025, seeks to secure long-term supplies and strengthen the critical mineral value chain. A ₹1,500-crore recycling scheme, approved on September 3, 2025, supports the recovery of critical minerals from e-waste, spent lithium-ion batteries and other scrap.

The Central Government has also auctioned 64 critical and strategic mineral blocks and 11 Exploration Licence blocks.

The new CAPEX scheme adds targeted support for converting mineral feedstock into high-purity industrial products. Its implementation will be important to translating access to resources into a stronger domestic manufacturing base and more secure supplies of lithium and nickel products.

(PIB)