Cabinet Approves Rs 2,814 Crore Scheme for Domestic Lithium and Nickel Processing Plants

The Union Cabinet on November 4 approved a Rs 2,814 crore capital expenditure support scheme to establish domestic processing plants for lithium and nickel. The scheme runs from financial year 2026-27 to 2030-31 and provides a 30 percent capital subsidy on eligible investment for four plants: two for lithium and two for nickel.

Each lithium plant must have a minimum capacity of 30,000 tonnes. Each nickel plant must have a minimum capacity of 50,000 tonnes. Capital support is capped at Rs 500 crore per lithium beneficiary and Rs 900 crore per nickel beneficiary. Cobalt is expected to be recovered as a by-product of nickel processing. The plants will convert ores and intermediate products into high-purity compounds for use in electric mobility, battery energy storage systems, electronics, defence and speciality steel.

Beneficiaries will be selected through a two-stage process. Applicants first pass technical qualification. Qualified bidders then compete on a least-cost basis, with preference given to those seeking the lowest capital support from the government. Two beneficiaries will be chosen for each mineral. The scheme addresses limited domestic beneficiation and processing capacity, high capital requirements and restricted access to technology.

Union Minister for Coal and Mines G. Kishan Reddy said the scheme would strengthen domestic capabilities, boost manufacturing and reduce import dependence. Union Minister Ashwini Vaishnaw noted that the Critical Minerals Mission has advanced in a systematic manner. Processing of critical minerals remains concentrated in a few global locations, primarily China. India currently imports most of its refined lithium and nickel compounds.

The government statement said commercial-scale operations have been constrained by capital intensity and raw-material availability. The subsidy is designed to bridge that gap for the first four plants. No timeline has been set for the first commercial production. Selection of the four beneficiaries is expected to begin once the implementing ministry issues detailed guidelines.

The outlay of Rs 2,814 crore covers the five-year period. It is separate from earlier incentives for critical-mineral exploration and from the energy-storage scheme approved earlier in the week. Together the measures aim to build end-to-end capacity from ore to finished battery materials. How quickly private investors respond to the 30 percent subsidy, and whether they can secure ore supply agreements, will determine the pace of capacity addition.

Lithium and nickel are essential for lithium-ion batteries used in electric vehicles and grid storage. Domestic processing would allow India to capture more value from any future ore discoveries and to reduce exposure to price and supply disruptions in the international market. The scheme does not include direct support for mining; it targets the conversion step that has remained largely abroad.

Officials have not named potential bidders or locations. The least-cost selection criterion is intended to limit the fiscal outlay while still attracting technically capable operators. If the four plants meet their minimum capacities, India would add 60,000 tonnes of lithium processing and 100,000 tonnes of nickel processing. Those volumes remain small relative to global demand, yet they mark the first dedicated domestic processing capacity of this scale.

The Cabinet decision follows earlier approvals for grid-scale storage and for extensions under the Agnipath scheme. The critical-minerals processing measure is the latest step in a sequence of industrial-policy decisions aimed at supply-chain resilience. Implementation details and the first round of bidding will show how quickly the capacity materializes.