Critical Mineral Processing Scheme 2026: ₹2,814 Crore, Lithium & Nickel Plants

Approved: 4 November 2026 | Updated: 5 November 2026 | Economy • Mining • Energy transition • GS-III

The Union Cabinet on 4 November 2026 approved the Capex Support Scheme to Promote Critical Mineral Processing, with a financial outlay of ₹2,814 crore over five years. The scheme is designed to create domestic capacity for processing lithium and nickel ores or intermediate products into high-purity compounds. It is a targeted industrial-policy intervention: the government is supporting processing facilities, not announcing four new mines or guaranteeing that India will become self-sufficient in every critical mineral.

Scheme at a glance

These figures come from the Prime Minister’s Office Cabinet release. The detailed scheme guidelines will govern the eligible investment, technical standards, milestones and beneficiary obligations.

Why processing is a strategic gap

Critical minerals are inputs whose availability is important to economic activity, technology or national security and whose supply may be exposed to concentration or disruption. The Ministry of Mines’ 2023 assessment identified 30 minerals as critical for India, including lithium, cobalt, nickel, graphite, copper and rare-earth elements. The list is not a claim that all 30 have identical uses or supply risks.

Mining and processing are different stages of a mineral value chain. An ore may be extracted from a geological deposit, but the material usually requires beneficiation, chemical treatment, separation or refining before it can be used in a battery, electronic component, alloy or industrial process. Processing can be capital-intensive and technically demanding; it also requires dependable raw-material feed, power, water, skilled personnel, environmental safeguards and buyers for the output.

India’s dependence is particularly visible in refined intermediates and high-purity materials. The Cabinet release notes that domestic beneficiation and processing infrastructure for lithium, nickel and cobalt remains at a nascent stage. A country can therefore possess mineral resources—or acquire ore abroad—yet remain vulnerable if the conversion stages are concentrated elsewhere.

What the scheme will support

Lithium processing

Two lithium processing plants are envisaged, each with a minimum capacity of 30 kilotonnes (kt). Lithium compounds such as lithium carbonate and lithium hydroxide are used in battery supply chains, although the precise product mix and technology will depend on the selected project. The scheme provides a capital subsidy of 30% of eligible investment, capped at ₹500 crore per lithium beneficiary.

Nickel processing

Two nickel processing plants, each with a minimum capacity of 50 kt, are envisaged. Nickel is used in stainless steel, alloys and several battery chemistries. The maximum capital support is ₹900 crore per nickel beneficiary, subject to the 30% eligible-investment rule and scheme conditions. Nickel processing can also yield cobalt as a by-product; the Cabinet expects cobalt recovery from nickel production to add value rather than treat it as waste.

The minimum capacities are plant-level targets in the Cabinet announcement. They should not be confused with annual national production, installed mining capacity or a guaranteed output already available in the market.

How beneficiaries will be selected

The selection process has two stages:

1. Technical qualification: applications are first assessed against technical criteria. Only applicants that qualify can move to financial bidding.
2. Financial bidding: for each mineral, two beneficiaries will be selected using a least-cost criterion—the lowest capital-expenditure support sought from the government under the scheme.

Support will be paid in three instalments linked to specified milestones. This design matters because it ties public assistance to project progress instead of treating the entire subsidy as an unconditional upfront transfer. The precise milestone schedule and compliance requirements must be read in the final guidelines.

How it fits the National Critical Mineral Mission

The new processing incentive should be read alongside—not as a replacement for—the National Critical Mineral Mission (NCMM). The Mission, approved in January 2025, takes a wider value-chain approach: exploration, mining, overseas asset acquisition, processing, recycling, technology development and workforce capacity. The Ministry of Mines’ mission document sets objectives such as 1,200 exploration projects, auction of 100 critical-mineral blocks by FY 2030–31, and domestic production of at least 15 critical and strategic minerals.

The processing scheme addresses one specific bottleneck within that larger architecture. Exploration may identify a deposit; auctions and mining leases can enable extraction; processing converts material into usable intermediates; recycling can recover minerals from end-of-life products and industrial residues. Each stage needs its own infrastructure, investment and environmental review.

For background, see the National Critical Mineral Mission document and the Ministry of Mines’ critical-mineral assessment.

Why the scheme matters for industry and national security

High-purity lithium and nickel compounds are relevant to electric mobility, battery energy storage systems, electronics, defence equipment and speciality steel. A domestic processing base can:

• increase value addition within India rather than exporting or importing lower-value intermediates;
• diversify supply routes and reduce exposure to a single processing geography;
• create demand for chemical engineering, metallurgy, process control and environmental-management skills;
• support downstream manufacturing by making intermediate materials more accessible; and
• improve the ability to recover associated materials, including cobalt in nickel processing.

These are potential benefits, not automatic outcomes. A plant needs raw material, competitive operating costs, reliable technology, environmental permissions and a market. Domestic processing may still rely on imported feedstock; therefore, the scheme reduces one vulnerability but does not eliminate all import dependence.

Environmental and implementation questions

Critical-mineral processing can involve chemical reagents, tailings, wastewater, energy-intensive steps and risks to workers and nearby communities. Projects must comply with applicable environmental, water, waste, occupational-safety and land-use requirements. Subsidy eligibility should not be read as exemption from statutory clearances.

Monitoring should distinguish announced capacity from commissioned capacity, eligible investment from actual expenditure, and subsidy disbursed from production achieved. Useful indicators include plant commissioning, recovery rates, product purity, domestic value added, raw-material sourcing, recycling inputs, energy and water intensity, and compliance records. These indicators would help evaluate whether the policy is delivering resilience rather than only construction announcements.

Static GK and exam relevance

• UPSC GS-III: mineral resources, energy transition, industrial policy, supply-chain resilience, science and technology, environmental impact and internal security.
• GS-II: role of the Union Cabinet, Ministry of Mines and mission-based governance.
• Economy: capital subsidy, capex, import substitution, value addition and least-cost bidding.
• Science: distinction between ore, concentrate, intermediate and high-purity compound; battery materials and metallurgy.
• Static facts: lithium is an alkali metal; nickel and cobalt are transition metals. The Ministry of Mines identified 30 critical minerals in 2023; NCMM was approved in 2025.

For the related energy-storage angle, read India’s ₹14,500-crore grid-scale storage VGF scheme. For the broader statistics and policy-data framework, see VISTAR Scheme 2026.

What candidates should remember

₹2,814 crore; five years (FY 2026–27 to 2030–31); 30% capital subsidy; four plants—two lithium (minimum 30 kt each) and two nickel (minimum 50 kt each); support ceilings ₹500 crore/lithium and ₹900 crore/nickel beneficiary; technical screening followed by least-cost financial bidding; three milestone-linked instalments; cobalt expected as a nickel-processing by-product.

Official source: Cabinet approval—PM India, 4 November 2026. Scheme implementation details should be checked against the Ministry of Mines’ final guidelines when issued.

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