Cabinet clears ₹2,814-crore support for lithium, nickel processing plants

The five-year scheme offers a 30 per cent capital subsidy for four lithium and nickel processing plants, aiming to reduce import dependence and strengthen critical mineral supply chains

The Union Cabinet on Wednesday approved a ₹2,814-crore capital expenditure support scheme to establish domestic critical mineral processing plants for lithium and nickel, a move welcomed by industry players who said it would address a key gap in India’s critical mineral value chain and help reduce dependence on imports of refined materials.

 

Under the scheme, which will run for five years from FY27 to FY31, the government will provide a capital subsidy of 30 per cent of eligible investment for setting up two lithium processing plants and two nickel processing plants. The plants will have minimum processing capacities of 30,000 tonnes each for lithium and 50,000 tonnes each for nickel.

 

 

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

 

The scheme aims to develop domestic processing capabilities for converting lithium and nickel ores and intermediate products into high-purity compounds. Cobalt is also expected to be recovered as a by-product of nickel processing.

 

Beneficiaries will be selected through a two-stage process, beginning with technical qualification, followed by financial bidding. For each mineral, two beneficiaries will be selected based on the least-cost criterion, with preference given to bidders seeking the lowest capital expenditure support from the government. The incentives will be disbursed in three tranches linked to the achievement of specified milestones.

 

The scheme comes against the backdrop of India's substantial dependence on imports of refined intermediates and high-purity materials, including lithium, nickel and cobalt. The government said domestic beneficiation and processing infrastructure for these minerals remains at a nascent stage, with commercial-scale projects facing challenges such as high capital requirements, limited availability of suitable technologies and constrained access to raw materials.

 

At an industry event last month, Union Mines Secretary Keshav Chandra said the government was working to establish critical mineral processing parks in four states — Gujarat, Maharashtra, Odisha and Andhra Pradesh.

 

"All these four parks will have their own ecosystem for a particular mineral," Chandra said, adding that the parks in Gujarat and Andhra Pradesh would focus on rare earth elements, while those in Maharashtra and Odisha would cater to lithium and nickel, respectively.

 

Attero co-founder and CEO Nitin Gupta said the scheme addressed a key gap in India's critical mineral value chain — domestic processing capacity. While the country was taking steps to secure access to critical mineral resources, developing the ability to process them into high-purity materials was equally important to reduce import dependence and strengthen supply chain security, he said.

 

LOHUM founder and CEO Rajat Verma said the scheme could help India move from importing refined materials towards developing domestic supplies by supporting facilities that convert lithium and nickel into high-purity compounds.

 

"As a processor of both, LOHUM welcomes this decisive step," he said.

 

The scheme complements the government's existing support for critical mineral recycling, creating incentives for both the processing of primary mineral resources and the recovery of metals from used batteries and electronic waste, said Rajesh Gupta, managing director and founder of Evergreen Recyclekaro India.

 

"Together, these initiatives can help build a more dependable domestic supply chain for critical minerals," he said, adding that lithium, nickel and cobalt compounds also have applications in chemicals, catalysts, pharmaceuticals, speciality steel and defence.

 

The proposed facilities are expected to support sectors such as electric mobility, battery energy storage systems, electronics, defence and speciality steel, while strengthening domestic value addition and reducing reliance on overseas processing capacities.