New initiative to set up four processing plants, reduce import dependence and strengthen critical mineral supply chains

 

THEBUSINESSBYTES BUREAU

NEW DELHI, NOVEMBER 4, 2026

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved a Rs 2,814-crore capital expenditure support scheme to boost domestic processing of critical minerals, particularly lithium and nickel, in a major push towards reducing import dependence and strengthening India's strategic supply chains.

The scheme, to be implemented over five years from 2026-27 to 2030-31, seeks to establish four critical mineral processing plants, including two lithium processing facilities with a minimum capacity of 30,000 tonnes each and two nickel processing plants with a minimum capacity of 50,000 tonnes each.

Under the scheme, eligible investors will receive capital subsidies covering 30 per cent of their investments. The maximum financial assistance has been capped at Rs 500 crore per beneficiary for lithium processing projects and Rs 900 crore for nickel processing facilities.

The initiative assumes significance as India remains heavily dependent on imports of refined intermediates and high-purity critical mineral materials, including lithium, nickel and cobalt, amid limited domestic processing infrastructure. The concentration of global processing capacities in a handful of countries has exposed supply chains to geopolitical uncertainties, price fluctuations and potential export restrictions.

The government expects the scheme to facilitate the development of domestic processing capabilities, encourage value addition within the country and create resilient end-to-end critical mineral value chains.

The proposed facilities will process lithium and nickel ores and intermediary products into high-purity compounds. Cobalt is also expected to be recovered as a by-product of nickel processing, further strengthening the availability of strategically important minerals.

These materials are crucial for emerging and strategic industries, including electric mobility, battery energy storage systems, electronics, defence and speciality steel, where uninterrupted access to critical minerals is essential for manufacturing growth and technological advancement.

The selection of beneficiaries will follow a two-stage competitive process. Applicants will first undergo technical evaluation, with only those meeting the prescribed eligibility criteria allowed to participate in financial bidding.

For each mineral, two beneficiaries will be selected on the basis of the least-cost criterion, meaning those seeking the lowest capital expenditure support from the government will be preferred. Financial assistance will be released in three instalments linked to the achievement of specified project milestones.

The government said the initiative is aimed at addressing the high capital requirements, technology constraints and limited access to raw materials that have so far impeded the development of commercial-scale critical mineral processing facilities in the country.

The scheme is expected to play a significant role in advancing the objectives of Atmanirbhar Bharat by strengthening domestic manufacturing capabilities, promoting import substitution and reducing vulnerabilities arising from concentrated global supply chains.

With demand for critical minerals expected to grow alongside the expansion of clean energy technologies, electric vehicles and advanced manufacturing, the initiative marks a significant step towards securing India's long-term mineral requirements and enhancing its economic and strategic resilience.