The Union Cabinet has approved a scheme with a financial outlay of Rs 2,814 crore aimed at enhancing critical mineral processing within India. This initiative is designed to reduce the country’s reliance on imports and to develop domestic capabilities in a sector that is currently dominated by a few nations, notably China.

With China controlling over 90 per cent of the global processing capacity for certain critical minerals, including rare earth elements and battery-grade graphite, this scheme is seen as a strategic necessity for India. India’s current dependence on imports for refined intermediates and high-purity materials is significant, as the country’s infrastructure for the beneficiation and processing of minerals.

These include lithium, nickel, and cobalt is still in its nascent stages. The challenges of high capital investment, limited access to advanced technologies, and constraints in raw material availability have hindered the establishment of large-scale processing facilities.

The newly introduced ‘Capex Support Scheme to Promote Critical Mineral Processing’ aims to bridge these gaps by offering financial assistance for the establishment of domestic processing plants. The focus will be on converting lithium and nickel ores, as well as intermediary products, into high-purity compounds, with cobalt recovery as a potential by-product of nickel processing.

Details of the Financial Support

The scheme will be implemented over a five-year period, spanning from the financial year 2026-27 to 2030-31. Under this programme, the government will provide a capital subsidy amounting to 30 per cent of the eligible investment for the establishment of four critical mineral processing plants.

These facilities will include 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. The maximum capital support has been set at Rs 500 crore per beneficiary for lithium processing projects and Rs 900 crore per beneficiary for nickel processing projects.

This financial assistance is intended to encourage investment in the critical minerals sector, thereby enhancing India’s self-sufficiency in this area. The initiative is expected to bolster various sectors that rely on these minerals, such as electric mobility, battery energy storage systems (BESS), electronics, defence, and speciality steel. By promoting domestic processing, the scheme aims to increase value addition and reduce dependence on foreign suppliers.

Selection Process for Beneficiaries

The selection of beneficiaries under this scheme will follow a two-stage process. Initially, applications will be evaluated based on technical qualifications, ensuring that only eligible applicants proceed to the financial bidding stage. For each mineral, two beneficiaries will be selected according to the least-cost criterion, prioritising those seeking the lowest capital expenditure support from the government.

The financial assistance will be disbursed in three instalments, contingent upon the achievement of specific project milestones. This structured approach is designed to ensure that funds are allocated efficiently and that projects meet their intended objectives.

Ultimately, the scheme aims to strengthen India’s position in the critical mineral value chain by fostering domestic processing capabilities. This development is expected to enhance the resilience of supply chains for minerals that play a crucial role in India’s energy transition, manufacturing, and strategic industries.

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