India clears $297m critical minerals scheme

India’s Union Cabinet has approved a Rs 2,814-crore ($297 million) capital expenditure support scheme to promote domestic processing of critical minerals. Announced by Information Minister Ashwini Vaishnaw, the programme is designed to expand India’s capacity to process lithium and nickel, which are essential inputs for several high-growth industries.

The scheme, formally titled the “Capex Support Scheme to Promote Critical Mineral Processing,” will be implemented over five years from the 2026-27 to 2030-31 financial years. It is framed as a response to the geographic concentration of critical mineral processing, which exposes supply chains to geopolitical disruptions, price volatility and potential supply restrictions.

Under the operational guidelines, the government will provide a capital subsidy of 30 per cent of eligible investment for setting up four critical mineral processing units. These include two lithium processing facilities, each with a minimum capacity of 30 kilotonnes, and two nickel processing plants, each with a minimum capacity of 50 kilotonnes.

Capital support under the scheme is capped at Rs 500 crore per lithium beneficiary and Rs 900 crore per nickel beneficiary. The financial assistance will be released in three instalments, each tied to defined project milestones to ensure that funds track progress in establishing and operationalising the plants.

Companies seeking support will undergo a two-stage evaluation mechanism. Applicants must first clear a technical qualification assessment, after which eligible proposals will be ranked using a least-cost criterion that favours bidders requesting lower capital expenditure support.

For each mineral, two beneficiaries will be selected, bringing the total number of supported plants to four. This structure is intended to foster competition among potential operators while ensuring that public funds are directed to projects that can achieve capacity targets with relatively lower subsidy requirements.

The initiative targets the conversion of lithium and nickel ores or intermediary products into high-purity compounds within India. By strengthening domestic processing, policymakers aim to increase value addition in-country and reduce heavy reliance on imports of refined critical minerals.

India currently has limited domestic processing capacity for lithium, nickel and cobalt and relies significantly on overseas suppliers, including countries that dominate the global critical mineral value chain. The new scheme is intended to bolster supply chain resilience and economic security, with implications for national security and decarbonisation timelines.

Sectors expected to benefit from enhanced domestic availability of processed lithium and nickel include electric mobility, battery energy storage systems, electronics, defence and speciality steel. Strengthening India’s position across the critical mineral value chain is a key objective, alongside supporting the timely achievement of decarbonisation targets.