The Union Cabinet on Wednesday cleared a Rs 2,814-crore scheme to boost critical mineral processing in India, aiming to cut dependence on imports and strengthen domestic capabilities in an industry currently controlled by a small number of countries, especially China.
China accounts for over 90 per cent of the global processing capacity for certain critical minerals, including rare earths and battery-grade graphite. This concentration makes international supply chains vulnerable to geopolitical tensions, export curbs and fluctuations in prices, highlighting the strategic need to develop alternative processing centres.
India relies heavily on imports for refined intermediates and high-purity materials, as its domestic infrastructure for mineral beneficiation and processing, particularly for lithium, nickel and cobalt, is still at an early stage. Setting up commercial-scale processing facilities has also been difficult due to high investment requirements, limited access to appropriate technologies and shortages of available raw materials.
The newly approved 'Capex support scheme to promote critical mineral processing' aims to bridge these gaps by offering financial assistance to establish processing facilities within the country. It will primarily focus on converting lithium and nickel ores and intermediate products into high-purity compounds. Cobalt is also expected to be extracted as a by-product during nickel processing.
The scheme is expected to benefit industries that depend on these minerals, such as electric mobility, battery energy storage systems (BESS), electronics, defence and speciality steel.
WHAT DOES THE SCHEME PROVIDE?
The programme has a total allocation of Rs 2,814 crore and will run for five years, covering the financial years 2026-27 to 2030-31. The government will offer a capital subsidy equivalent to 30 per cent of eligible investments to establish four critical mineral processing facilities.
The proposed facilities will comprise two lithium processing plants, each with a minimum capacity of 30 kilotonnes, and two nickel processing units, each with a minimum capacity of 50 kilotonnes.
The maximum financial assistance has been limited to Rs 500 crore for each beneficiary undertaking a lithium processing project and Rs 900 crore for each beneficiary setting up a nickel processing facility.
HOW WILL COMPANIES BE SELECTED?
Beneficiaries will be chosen through a two-stage selection procedure. Applications will initially undergo a technical evaluation, after which only those meeting the eligibility requirements will be permitted to take part in the financial bidding process.
Two beneficiaries will be selected for each mineral based on the least-cost principle. This means companies requesting the lowest amount of capital expenditure support from the government will receive preference.
The financial assistance will be disbursed in three instalments, with each payment linked to the completion of specified project milestones.
The scheme seeks to strengthen India's presence across the critical mineral value chain by promoting domestic processing, boosting value addition and lowering reliance on foreign suppliers. It is also expected to make supply chains more resilient for minerals that are becoming increasingly important to the country's energy transition, manufacturing sector and strategic industries.
