India approves Rs 2,814 crore scheme to boost lithium, nickel processing and cut import dependence

India is stepping up efforts to reduce its dependence on imports of critical minerals, with the Union Cabinet on Wednesday approving a Rs 2,814 crore scheme to boost domestic processing of lithium and nickel.

Prime Minister Narendra Modi highlighted the need to build domestic capabilities in critical mineral processing, saying India should not depend on other countries for materials that power future technologies.

“Do you feel India should depend on other countries for processing the critical minerals that power our future? I certainly don’t!” Modi said in a post on X.

He noted that lithium, nickel and cobalt are essential for electric vehicles (EVs), batteries, electronics and defence, but India remains heavily dependent on imports of refined materials.

“The principle is clear…India must have capabilities to build technologies of the future!” he said, highlighting the government’s focus on setting up new processing plants, providing capital subsidies, increasing domestic value addition and strengthening supply chains.

The scheme, approved at a Cabinet meeting chaired by Modi, will provide capital expenditure support for setting up four critical mineral processing plants over five years, from FY 2026-27 to 2030-31.

Under the scheme, the government will offer a capital subsidy of 30 per cent of eligible investments to establish two lithium processing plants and two nickel processing plants.

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The proposed lithium plants will have a minimum processing capacity of 30,000 tonnes each, while the nickel processing plants will have a minimum capacity of 50,000 tonnes each.

The maximum capital support has been capped at Rs 500 crore per beneficiary for lithium processing plants and Rs 900 crore per beneficiary for nickel processing facilities.

How will the scheme work?

The selection of beneficiaries will take place through a two-stage process. Applicants will first undergo technical evaluation, following which qualified bidders will participate in financial bidding.

Two beneficiaries for each mineral will be selected based on the least-cost criterion, meaning those seeking the lowest capital expenditure support from the government will be preferred.

The incentives will be disbursed in three tranches, linked to the achievement of specified milestones.

Why is India focusing on critical mineral processing?

India remains substantially dependent on imports of refined critical mineral intermediates and high-purity materials, including lithium, nickel and cobalt, as domestic processing infrastructure is still at a nascent stage.

The concentration of critical mineral processing in a handful of countries exposes global supply chains to geopolitical disruptions, price volatility and potential supply restrictions.

The government aims to build domestic processing capabilities, increase value addition within the country and reduce reliance on overseas suppliers.

The scheme is also expected to support the recovery of cobalt as a by-product of nickel production.

These minerals are essential for strategic and emerging industries, including electric vehicles, battery energy storage systems (BESS), electronics, defence and speciality steel.

The initiative is part of the government’s broader push towards self-reliance under the Atmanirbhar Bharat programme and strengthening India’s position across the critical mineral value chain.