The Union Cabinet on Wednesday approved a ₹2,814-crore capital expenditure support scheme to establish domestic critical mineral processing plants for lithium and nickel, according to Information and Broadcasting Minister Ashwini Vaishnaw. As reported by The Times of India, the scheme has been officially termed as an incentive policy worth ₹2,814 crore ($297 million) to process critical minerals. The scheme will have a financial outlay of ₹2,814 crore and will be implemented over five years, from FY27 to FY31. The initiative is specifically aimed at strengthening India's critical mineral ecosystem through targeted capital expenditure support, with the primary objective of reducing dependence on imports of critical minerals. Following the cabinet approval, metal, mining & mineral processing stocks are in focus of investors on Thursday, November 4, as reported by Upstox Securities.
Under the scheme, the government will provide a 30% capital subsidy for setting up two lithium processing plants and two nickel processing plants. The plants will have minimum processing capacities of 30,000 tonnes each for lithium and 50,000 tonnes each for nickel. The maximum capital support has been capped at ₹500 crore per beneficiary for lithium processing plants and ₹900 crore per beneficiary for nickel processing plants. The scheme aims to develop domestic processing capabilities for converting lithium and nickel ores and intermediate products into high-purity compounds, with cobalt also expected to be recovered as a by-product of nickel processing.
Beneficiaries will be selected through a two-stage process beginning with technical qualification, followed by financial bidding. For each mineral, two beneficiaries will be selected based on the least-cost criterion, with preference given to bidders seeking the lowest capital expenditure support from the government. The incentives will be disbursed in three tranches linked to the achievement of specified milestones. This structured approach ensures transparency and efficiency in the selection process while maintaining government oversight of project implementation.
The scheme addresses India's substantial dependence on imports of refined intermediates and high-purity materials, including lithium, nickel and cobalt. As noted by The Times of India, domestic beneficiation and processing infrastructure for these minerals remains at a nascent stage, with commercial-scale projects facing challenges such as high capital requirements, limited availability of suitable technologies and constrained access to raw materials. The proposed facilities are expected to support sectors such as electric mobility, battery energy storage systems, electronics, defence and speciality steel, while strengthening domestic value addition and reducing reliance on overseas processing capacities.
At an industry event last month, Union Mines Secretary Keshav Chandra announced plans to establish critical mineral processing parks in four states — Gujarat, Maharashtra, Odisha and Andhra Pradesh. As reported by Business Standard, "All these four parks will have their own ecosystem for a particular mineral." The parks in Gujarat and Andhra Pradesh would focus on rare earth elements, while those in Maharashtra and Odisha would cater to lithium and nickel, respectively. Industry experts welcome this comprehensive approach as addressing key gaps in India's critical mineral value chain and supporting the country's transition from importing refined materials to developing domestic supplies.
