New Capital Support Scheme Boosts India's Mineral Processing Sector
In a significant move to secure strategic resources, the Union Cabinet under Prime Minister Narendra Modi has sanctioned the Capex Support Scheme to Promote Critical Mineral Processing. The government has earmarked ₹2,814 crore for the program, which will operate over a five-year horizon to bolster domestic processing of lithium and nickel.
The core mandate of the scheme is to build substantial indigenous refining capabilities, thereby diminishing reliance on foreign suppliers. This infrastructure push is intended to secure reliable material flows for the electric vehicle industry, battery energy storage networks, and defense manufacturing units.
Implementation will involve the establishment of four major processing facilities across India. Two plants will specialize in lithium, each with a minimum operational capacity of 30,000 tonnes. The other two will focus on nickel refining, starting with a minimum capacity of 50,000 tonnes. Cobalt recovery will be integrated into the nickel processing workflow as a co-product.
The administration intends to shift value addition deeper into the country by processing raw lithium and nickel ores into high-purity chemical derivatives domestically. To accelerate this shift, investors in qualifying ventures will be eligible for a capital subsidy reaching 30 percent. The maximum financial grant available is ₹500 crore for lithium initiatives and ₹900 crore for nickel initiatives.
Awarding contracts will follow a transparent, two-tier procedure. Initial shortlisting will be based on technical eligibility criteria. Qualified entities will then enter a financial bidding stage, with the award going to the applicant requesting the minimum capital support. Disbursement of approved funds will occur in three tranches, aligned with verified project milestones.
At present, the worldwide capacity for processing these strategic minerals is confined to a limited number of regions, making global supply networks susceptible to political tensions, market fluctuations, and delivery disruptions. India’s current heavy reliance on imported refined intermediates underscores the urgency of this domestic push. Expanding local processing is considered vital for safeguarding economic stability, ensuring energy security, and meeting sustainable power targets.
Stakeholders across the electric vehicle, battery energy storage, electronics, defense, and specialty steel sectors are expected to gain significantly. The initiative will reinforce the domestic battery manufacturing base, improve the price competitiveness of renewable energy technologies, and advance the Atmanirbhar Bharat mission by fostering a self-reliant, end-to-end critical mineral value ecosystem.