Critical minerals such as lithium, nickel and cobalt are essential for electric mobility, batteries, electronics and defence. However, having access to these minerals and having the domestic capacity to process them into high-purity materials are two different things. To strengthen India’s processing capabilities, the central government has approved a new scheme.
The scheme will remain in force for five years, from FY2026–27 to FY2030–31. Let us understand its key provisions, why India needs it and what it could mean for investors.
What’s Happening?
On 4 November 2026, the central government approved the ‘Capex Support Scheme to Promote Critical Mineral Processing’. Under the scheme, Rs 2,814 crore will be spent over the next five years. Its objective is to build domestic capacity to process ores and intermediate products of critical minerals such as lithium and nickel into high-purity compounds. It also aims to recover cobalt as a by-product of nickel processing.
The scheme will support the processing of 24 specified critical minerals, covering both mined and recycled materials. This will help strengthen the domestic supply of raw materials required by industries such as semiconductors, batteries, electronics, defence equipment and heavy machinery. It is also expected to reduce India’s dependence on imports of critical minerals and help develop a stronger domestic processing ecosystem.
How Much Support Will Be Available Under the Scheme?
Under the scheme, eligible investments will receive a capital subsidy of 30%. Each of the two lithium processing plants must have a minimum capacity of 30 kilo tonnes (kt), while each of the two nickel processing plants must have a minimum capacity of 50 kt. A total of four plants will be set up. The maximum assistance has been capped at Rs 500 crore per lithium beneficiary and Rs 900 crore per nickel beneficiary.
Beneficiaries will be selected through a two-stage process. First, applicants will undergo a technical eligibility assessment. Only those who qualify will be allowed to participate in the financial bidding process. Two beneficiaries will be selected for each mineral, with preference given to the proposals seeking the lowest capital assistance. The incentive amount will be released in three installments after the beneficiaries meet the prescribed milestones.
Why Does India Need Domestic Processing?
India’s challenge is not just the availability of critical minerals but also its limited capacity to convert them into refined intermediates and high-purity materials.
According to The Indian Express, India’s import dependence on several important minerals, including cobalt, lithium, nickel, rare earth elements and silicon, is nearly 100%. In comparison, China accounts for nearly 90% of global critical mineral processing. This makes India vulnerable to geopolitical tensions, price fluctuations and disruptions in global supply chains.
Setting up large processing plants also involves challenges such as high initial investment, access to technology and the availability of raw materials. Meanwhile, four states have been identified for developing critical mineral processing parks. The focus will be on rare earths in Gujarat and Andhra Pradesh, nickel in Odisha and lithium processing in Maharashtra.
What Does This Mean for Investors?
The direct beneficiaries of the scheme will be the selected lithium and nickel processing companies. The 30% capital subsidy could reduce their initial investment burden. However, companies will first have to clear the technical assessment, qualify through the competitive bidding process and meet the prescribed milestones to receive the assistance.
An increase in domestic processing capacity could also support the supply chains of electric mobility, battery energy storage systems (BESS), electronics, defence and specialty steel. This could create opportunities for businesses operating across these sectors.
What’s Next?
The scheme is part of the government’s broader efforts to strengthen India’s critical minerals ecosystem. According to The Indian Express, under the National Critical Mineral Mission, the government has committed Rs 500 crore over seven years, from 2024–25 to 2030–31, to build a stockpile of strategic minerals. The aim is to ensure the availability of essential minerals during supply disruptions.
A separate energy storage initiative approved by the Cabinet has also been announced. Under this initiative, viability gap funding of Rs 14,500 crore has been approved to support 92 GWh of grid-scale storage capacity between 2026–27 and 2030–31. This includes 30 GWh of battery energy storage systems, 60 GWh of pumped storage projects and 2 GW of emerging storage technologies.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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