Critical Mineral Processing Scheme 2026: ₹2,814 Crore Approved

Critical Mineral Processing Scheme 2026: Cabinet approves ₹2,814 crore for domestic lithium and nickel processing plants with 30% capital subsidy. Check key features, objectives and exam facts.

1. Introduction: Cabinet Approves Critical Mineral Processing Scheme

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the Capex Support Scheme to Promote Critical Mineral Processing on 4 November 2026, with a total financial outlay of ₹2,814 crore. The scheme aims to strengthen India’s domestic capacity to process critical minerals, particularly lithium and nickel, which are essential for modern industries, clean energy technologies and national security.

The scheme will operate for five years, from Financial Year 2026-27 to FY 2030-31. It focuses on establishing four domestic critical mineral processing plants through targeted capital expenditure (CAPEX) support. The initiative is expected to reduce India’s dependence on imported refined minerals, encourage domestic manufacturing and strengthen the country’s position in global critical mineral supply chains.

2. Objectives of the Critical Mineral Processing Scheme

The primary objective is to develop domestic infrastructure for converting lithium and nickel ores and intermediate products into high-purity compounds. India currently depends substantially on imports for refined critical mineral materials because its domestic processing infrastructure is still at an early stage of development.

The scheme seeks to address this gap by encouraging private-sector investment in processing facilities. It will promote domestic value addition, reduce import dependence, improve supply chain resilience and support the development of an integrated critical mineral ecosystem.

Another important objective is to strengthen India’s economic security. Since the processing of several critical minerals is concentrated in a limited number of countries, international trade restrictions, geopolitical tensions and price fluctuations can disrupt their availability.

3. Financial Outlay and Government Support

The government has allocated ₹2,814 crore for implementing the scheme over five years. Under the programme, eligible investors will receive a capital subsidy of 30% of eligible investment for establishing four critical mineral processing facilities.

The proposed facilities will include:

• Two lithium processing plants, each with a minimum capacity of 30 kilotonnes (30,000 tonnes).
• Two nickel processing plants, each with a minimum capacity of 50 kilotonnes (50,000 tonnes).

The maximum capital support will be ₹500 crore per lithium processing beneficiary and ₹900 crore per nickel processing beneficiary. This financial assistance is intended to reduce the high initial investment required for establishing technologically advanced mineral processing facilities.

4. Selection Process for Beneficiaries

The government will select beneficiaries through a competitive two-stage process to ensure transparency and efficient utilisation of public funds.

In the first stage, applications will undergo technical evaluation. Only applicants meeting the prescribed technical requirements will qualify for the next stage.

In the second stage, technically qualified applicants will participate in financial bidding. Two beneficiaries will be selected for each mineral based on the least-cost criterion, meaning preference will be given to bidders seeking the lowest capital expenditure support from the government.

The financial incentives will be released in three instalments linked to the achievement of specified project milestones. This mechanism will help ensure that financial assistance is provided in accordance with project progress.

5. Importance of Lithium and Nickel in Modern Industries

Lithium and nickel are essential minerals for the global transition towards clean energy and advanced manufacturing.

Lithium is a major component of rechargeable lithium-ion batteries used in electric vehicles, smartphones, laptops and battery energy storage systems. Increasing electric vehicle adoption and renewable energy integration have significantly increased the importance of reliable lithium supplies.

Nickel is widely used in stainless steel production and several lithium-ion battery chemistries. It contributes to battery performance and is also important for industrial equipment, infrastructure and speciality steel manufacturing.

The scheme will also facilitate the recovery of cobalt as a by-product of nickel processing. Cobalt is used in rechargeable batteries, industrial applications and high-performance alloys.

6. Major Sectors Expected to Benefit

The development of domestic processing infrastructure is expected to support several strategically important sectors.

Electric Mobility: Domestic availability of processed lithium and nickel can strengthen India’s electric vehicle manufacturing ecosystem and battery supply chains.

Battery Energy Storage Systems: Processed critical minerals are important for manufacturing energy storage batteries, which help integrate renewable energy sources into the electricity grid.

Electronics Manufacturing: Lithium-ion batteries and other critical mineral-based materials are widely used in electronic devices and advanced equipment.

Defence Industry: Critical minerals support the manufacturing of specialised materials, advanced equipment and technologies required for defence applications.

Speciality Steel: Nickel is an important input for producing stainless steel and other specialised steel products used in industrial and infrastructure development.

7. Connection with Atmanirbhar Bharat

The Critical Mineral Processing Scheme supports the broader objective of Atmanirbhar Bharat by strengthening domestic manufacturing capabilities and reducing dependence on overseas processing facilities.

India’s critical mineral strategy involves developing capabilities across the entire value chain, including exploration, mining, beneficiation, processing and recycling. Establishing domestic processing plants will help bridge the gap between mineral availability and the production of industrially useful high-purity materials.

The initiative is also expected to encourage private investment, technological development, employment generation and greater domestic participation in emerging global industries.

8. Significance for India’s Economic and Strategic Security

Critical minerals have become important strategic resources because they are essential for clean energy technologies, telecommunications, electronics, transportation and defence manufacturing.

The geographical concentration of mineral processing creates vulnerabilities for countries that depend heavily on imports. Disruptions in international supply chains can affect industrial production, increase manufacturing costs and delay strategic projects.

By supporting domestic lithium and nickel processing, India aims to develop more reliable supply chains and strengthen its economic sovereignty. The scheme represents an important step towards building domestic capabilities in the technologies and industries expected to shape the future global economy.

B) Why Is the Critical Mineral Processing Scheme Important?

1. Reducing Import Dependence

India imports a substantial portion of its requirements for refined lithium, nickel and other critical mineral materials. Developing domestic processing facilities will help reduce dependence on foreign suppliers and strengthen the country’s ability to meet the growing demand of domestic industries.

2. Strengthening Electric Vehicle Manufacturing

Lithium and nickel are important inputs for rechargeable batteries used in electric vehicles. Domestic processing capabilities can strengthen India’s battery manufacturing ecosystem, support electric mobility and contribute to the country’s clean transportation objectives.

3. Improving National and Economic Security

Critical minerals are essential for defence equipment, electronics, telecommunications and strategic industries. Dependence on geographically concentrated international supply chains creates economic and national security risks. Domestic processing infrastructure can help reduce these vulnerabilities.

4. Supporting Renewable Energy and Energy Storage

Lithium-ion batteries are important for storing electricity generated through solar and wind energy. Reliable supplies of processed minerals can support battery energy storage systems and India’s transition towards cleaner energy sources.

5. Promoting Atmanirbhar Bharat

The scheme encourages domestic investment, technological development and industrial value addition. It will help India move beyond importing raw or refined materials towards developing its own processing capabilities and strengthening its manufacturing ecosystem.

6. Creating Opportunities for Industrial Development

The establishment of four processing plants can encourage private-sector participation, generate employment opportunities and support the development of associated industries. It can also strengthen India’s position in emerging global supply chains for advanced materials and clean energy technologies.

C) Historical Context: India’s Critical Mineral Strategy

1. Identification of Critical Minerals in India (2023)

In July 2023, the Ministry of Mines released India’s first comprehensive list of 30 critical minerals. The identification was based on factors such as economic importance, supply chain vulnerability, import dependence and the growing requirements of emerging technologies.

The list includes lithium, nickel, cobalt, graphite, copper, rare earth elements, gallium, germanium and several other minerals. This initiative established an important foundation for developing India’s critical mineral security strategy.

2. Amendments to the Mines and Minerals Development and Regulation Act (2023)

The Mines and Minerals (Development and Regulation) Amendment Act, 2023 introduced important reforms in the mining sector. It enabled the central government to auction mining leases and composite licences for specified critical and strategic minerals.

The amendments also aimed to encourage exploration, improve mineral availability and attract investment in India’s mining industry.

3. National Critical Mineral Mission (2025)

On 29 January 2025, the Union Cabinet approved the National Critical Mineral Mission (NCMM) to strengthen India’s critical mineral supply chains.

The mission focuses on exploration, mining, beneficiation, processing and recycling of critical minerals. It also seeks to secure mineral assets abroad to diversify India’s sources of supply.

4. Critical Mineral Processing Scheme (2026)

The approval of the ₹2,814 crore Capex Support Scheme on 4 November 2026 represents another important development in India’s critical mineral strategy.

While the National Critical Mineral Mission addresses the broader mineral value chain, the new scheme specifically targets the development of domestic lithium and nickel processing infrastructure. It aims to bridge the gap between mineral extraction and the production of high-purity materials required by advanced industries.

5. India’s Long-Term Clean Energy Vision

India’s commitment to achieving net-zero greenhouse gas emissions by 2070 has increased the importance of securing critical minerals. Electric vehicles, renewable energy storage, advanced electronics and other low-carbon technologies require reliable supplies of these materials.

Therefore, developing domestic processing capabilities is important not only for industrial growth but also for India’s long-term energy transition and technological development.

D) Key Takeaways from Critical Mineral Processing Scheme

Frequently Asked Questions (FAQs)

Q1. What is the Critical Mineral Processing Scheme?

The Capex Support Scheme to Promote Critical Mineral Processing is a Government of India initiative approved to develop domestic processing facilities for critical minerals, particularly lithium and nickel.

Q2. What is the total financial outlay of the Critical Mineral Processing Scheme?

The scheme has a total financial outlay of ₹2,814 crore.

Q3. When was the scheme approved?

The Union Cabinet approved the scheme on 4 November 2026, under the chairmanship of Prime Minister Narendra Modi.

Q4. Which ministry is responsible for implementing the scheme?

The Ministry of Mines, Government of India, is the nodal ministry.

Q5. What is the duration of the scheme?

The scheme will operate for five years, from Financial Year 2026-27 to FY 2030-31.

Q6. Which critical minerals are covered under the scheme?

The scheme primarily focuses on:

• Lithium
• Nickel

Cobalt is also expected to be recovered as a by-product of nickel processing.

Q7. How many processing plants will be established under the scheme?

Four processing plants will be established:

• Two lithium processing plants.
• Two nickel processing plants.

Q8. What is the minimum capacity of the proposed lithium processing plants?

Each lithium processing plant will have a minimum capacity of 30 kilotonnes (30,000 tonnes).

Q9. What is the minimum capacity of the proposed nickel processing plants?

Each nickel processing plant will have a minimum capacity of 50 kilotonnes (50,000 tonnes).

Q10. What percentage of capital subsidy will the government provide?

The government will provide a capital subsidy of 30% of eligible investment.

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