Union Cabinet: Rs 2,814 crore lithium-nickel scheme approved

The Union Cabinet has approved a Rs 2,814 crore scheme to support four lithium and nickel processing plants in India, according to a statement published by the Prime Minister’s Office. The Capex Support Scheme to Promote Critical Mineral Processing will run from financial year 2026-27 to 2030-31 and provide a capital subsidy of 30 per cent of eligible investment.

The scheme targets the conversion of lithium and nickel ores or intermediate products into high-purity compounds. The Cabinet statement said cobalt is also expected to be recovered as a by-product of nickel production. It identified electric mobility, battery energy storage systems, electronics, defence and speciality steel as sectors the processing facilities would support.

According to the statement, India remains substantially dependent on imported refined intermediates and high-purity materials because domestic infrastructure for preparing and processing critical minerals is at an early stage. The government intends the scheme to retain more value within India and reduce dependence on imported processed materials.

Technical qualification before subsidy bidding

The Cabinet statement provides for two lithium processing plants, each with a minimum capacity of 30 kilotonnes, and two nickel processing plants, each with a minimum capacity of 50 kilotonnes. A kilotonne is 1,000 tonnes. The statement does not specify a time basis for these capacity figures.

Capital expenditure, or capex, means investment in assets such as processing facilities, rather than routine operating costs. The announced subsidy applies to eligible investment, but the statement does not list the individual expenditure categories that will qualify.

Beneficiaries will be selected through a two-stage process, according to the Cabinet statement. Applications will first be assessed for technical qualification. Only applicants that pass that assessment will be eligible to participate in financial bidding.

For each mineral, two beneficiaries will then be selected on the basis of the lowest capital support sought. This means applicants must first meet the technical requirements before competing over the amount of government assistance requested.

The statement said incentives would be disbursed in three instalments linked to specified milestones. It did not identify those milestones or state the proportion of support payable at each stage. The announcement therefore sets out the broad payment structure, but not the detailed conditions for releasing each instalment.

Investment support addresses one processing constraint

The Cabinet statement identified three obstacles facing commercial-scale processing projects in India: high capital requirements, limited availability of suitable technologies and constrained access to raw materials.

The subsidy addresses the investment requirement. The announcement does not describe separate arrangements to supply the proposed plants with ores or intermediate products, or to provide processing technology.

According to the statement, critical mineral processing is concentrated in a few locations globally. The government said this exposes supply chains to geopolitical disruption, price volatility and potential supply restrictions, with implications for economic security and decarbonisation.

The government’s stated objectives are domestic value addition, import substitution and more resilient supply chains. These are intended outcomes, not results established by the Cabinet’s approval. The statement does not quantify the expected reduction in imports or identify buyers for the proposed plants’ output.

The broader distinction between securing minerals and processing them appears in the Ministry of Mines’ National Critical Mineral Mission backgrounder, published by the Press Information Bureau on 9 April 2025. It described a programme spanning exploration, mining, mineral preparation, processing and recycling, alongside efforts to secure supplies from domestic and overseas sources.

That backgrounder set a target of 1,200 Geological Survey of India exploration projects over 2024-25 to 2030-31. Exploration identifies and assesses mineral deposits. The processing scheme concerns a different stage: establishing facilities to turn mineral inputs into higher-purity products for industrial use.

Processing and recycling have different rules

The Cabinet approval is separate from the Critical Mineral Recycling Incentive Scheme notified by the Ministry of Mines on 8 September 2025 through notification CG-DL-E-08092025-266005.

The programmes differ first in their inputs. The processing announcement targets lithium and nickel ores or intermediate products. The ministry’s recycling guidelines, dated 2 October 2025, cover recovery from spent lithium-ion batteries, electronic waste and other eligible scrap.

The recycling guidelines identify eligible scrap streams including permanent magnets, spent catalysts and special alloy scrap containing critical minerals. They permit investment in new recycling units as well as capacity expansion, modernisation or diversification of existing units.

The financial support also differs. The recycling notification provided a 20 per cent capital expenditure incentive for units starting production within specified timelines, with reduced subsidy outside those timelines. It also provided operating expenditure support linked to incremental sales. The processing announcement sets out capital investment support and a competitive bidding mechanism instead.

The two programmes have different starting years. The recycling guidelines specify six financial years beginning in 2025-26; the processing scheme begins a financial year later. Both documents identify 2030-31 as the final financial year.

The recycling notification also distinguishes mineral extraction from preliminary waste handling. Activities limited to collecting, dismantling, shredding or sorting waste do not qualify for its incentives. Its focus is the extraction of useful minerals and compounds, rather than simply preparing discarded material for further treatment.

For processing investors, the Cabinet statement establishes the number of supported projects, their minimum capacities and the broad beneficiary-selection mechanism. It does not name selected companies or plant locations, give an application opening date or bidding deadline, or set a commissioning schedule. Eligible expenditure categories and the milestones governing subsidy payments are also unspecified in the announcement.