India has approved a ₹2,814 crore scheme to build domestic capacity for processing critical minerals, marking a new step in its effort to reduce dependence on overseas suppliers for materials used in electric vehicles, batteries, electronics and defence equipment. The five-year programme will run from FY2026-27 to FY2030-31.
The Union Cabinet approved the capital expenditure support scheme on November 4, 2026, with Information and Broadcasting Minister Ashwini Vaishnaw announcing the decision. The initiative targets a strategically important part of the mineral supply chain: converting mined ores and intermediate materials into refined, high-purity products that manufacturers can use.
What the ₹2,814 Crore Scheme Aims to Achieve
The scheme is designed to encourage investment in India’s critical mineral processing infrastructure. While the country has been expanding efforts to secure mineral resources through domestic exploration and overseas acquisitions, processing remains a major gap in its industrial supply chain.
Processing involves converting raw ores and intermediate materials into usable products with the required purity and chemical composition. These refined materials are essential for battery manufacturing, advanced electronics, renewable energy infrastructure and several defence applications.
The government is seeking to build this capability domestically so that Indian manufacturers are less exposed to disruptions in international supply chains.
The approved financial outlay is ₹2,814 crore, with implementation scheduled over five financial years, from FY2026-27 through FY2030-31. However, the initial Cabinet announcement did not publicly specify the complete eligibility criteria, subsidy structure, beneficiary selection process or detailed implementation guidelines.
Lithium and Nickel Processing in Focus
Before the Cabinet approval, reports by The Indian Express and Business Today outlined a proposed framework focused on lithium and nickel processing. The reported plan envisaged converting ores and intermediate products into high-purity compounds, with cobalt recovered as a by-product of nickel processing.
The pre-approval proposal included:
| Proposed component | Details reported before approval |
|---|---|
| Processing focus | Lithium and nickel |
| Lithium facilities | Two plants, minimum 30 kilotonnes each |
| Nickel facilities | Two plants, minimum 50 kilotonnes each |
| Proposed capital subsidy | 30% of eligible investment |
| Maximum support per lithium beneficiary | ₹500 crore |
| Maximum support per nickel beneficiary | ₹900 crore |
These figures describe the framework reported before the Cabinet decision. The final approved scheme’s detailed guidelines will determine whether these provisions have been retained and how companies can apply.
Lithium, nickel and cobalt are important inputs for lithium-ion batteries. Lithium is used in battery cells, while nickel can improve energy density in certain battery chemistries. Cobalt is also used in several battery formulations, although manufacturers are increasingly exploring alternatives that reduce its use.
Four States Identified for Critical Mineral Processing Parks
The government has previously identified four states for developing processing ecosystems around different minerals.
- Gujarat: Focus on rare earth processing, supported by the state’s existing mineral beneficiation capabilities and availability of heavy rare earth elements.
- Andhra Pradesh: Development of a rare earth processing corridor.
- Odisha: Focus on nickel processing, supported by domestic reserves and its geographical position for handling imported nickel.
- Maharashtra: Focus on lithium processing.
The broader objective is to develop integrated industrial ecosystems rather than isolated processing facilities. Such ecosystems could bring together mineral suppliers, processing companies, technology providers and downstream manufacturers.
The selection of these states was reported before the Cabinet approval. The final location and beneficiary arrangements under the new scheme will depend on the government’s implementation decisions.
Why India Wants to Reduce Dependence on China
Critical mineral processing has become an important strategic issue because supply chains are concentrated in a relatively small number of countries.
China dominates several stages of global critical mineral processing, giving it a significant position in the supply chains for batteries, electric vehicles, electronics and other advanced technologies. The Indian Express reported that China controls around 90% of global critical mineral processing.
India, meanwhile, has limited domestic processing capabilities and relies heavily on imports for several important minerals, including lithium, cobalt, nickel, rare earth elements and silicon.
This dependence creates risks for Indian manufacturers. Export restrictions, geopolitical tensions, trade disputes or disruptions to shipping routes can affect the availability and cost of essential materials.
Building domestic processing capacity could give India greater control over the supply of refined materials, even when some raw minerals must still be imported.
Critical Minerals Are Essential for India’s EV and Battery Industry
The scheme comes as India seeks to expand electric mobility, battery manufacturing and renewable energy storage.
Lithium-ion batteries are used in electric cars, two-wheelers, smartphones, laptops and grid-scale battery energy storage systems. Demand for these batteries is expected to rise as electric vehicle adoption and renewable energy installations expand.
Nickel and cobalt also serve industries beyond batteries. They are used in speciality steel, high-performance alloys, aerospace applications and certain defence technologies.
A stronger domestic processing industry could therefore support several manufacturing segments simultaneously.
For battery manufacturers, access to locally processed materials could reduce exposure to international price movements and supply interruptions. It could also create opportunities for Indian companies to develop expertise in mineral refining, chemical processing and advanced materials.
However, establishing processing facilities requires substantial investment in technology, equipment, energy, water management and environmental safeguards. The availability of raw materials and commercially viable processing technologies will also influence the success of these projects.
The New Scheme Builds on India’s Critical Minerals Mission
The ₹2,814 crore processing initiative forms part of India’s wider effort to strengthen its critical mineral supply chain.
The government launched the National Critical Mineral Mission in 2025 to improve domestic exploration, mining, processing, recycling and access to overseas mineral resources.
One existing initiative is the ₹1,500 crore Incentive Scheme for Promotion of Critical Mineral Recycling, approved in September 2025. It supports the recovery of critical minerals from secondary sources such as electronic waste, discarded lithium-ion batteries and other eligible scrap.
The recycling scheme is expected to support at least 270 kilotonnes of annual recycling capacity and approximately 40 kilotonnes of annual critical mineral production. It also aims to attract around ₹8,000 crore in investment and create close to 70,000 direct and indirect jobs.
The distinction between the two initiatives is important. The recycling programme focuses on recovering minerals from waste, while the newly approved ₹2,814 crore scheme is intended to encourage investment in critical mineral processing capacity.
Together, these initiatives address different stages of the supply chain.
The Bigger Picture
India’s critical mineral strategy is shifting beyond securing access to raw materials. Having mineral resources available is not enough if the country lacks the technology and industrial infrastructure to convert them into materials required by manufacturers.
The new scheme is intended to address this processing gap. It could support domestic battery production, electric mobility, electronics and defence manufacturing while creating opportunities for Indian companies to participate in a strategically important global industry.
However, government incentives alone cannot guarantee commercially competitive processing capacity. Technology access, reliable mineral supplies, environmental compliance, operating costs and long-term demand will determine whether the projects become viable.
Looking Ahead
The next important step will be the release of detailed implementation guidelines. Companies will need clarity on eligible investments, subsidy limits, application procedures, project timelines and the conditions for receiving capital support. The final framework will also determine how the government selects beneficiaries and connects processing facilities with downstream industries.
Over the longer term, the success of the ₹2,814 crore programme will depend on how much actual processing capacity India builds and how competitive that capacity becomes. If the initiative attracts sustained private investment and supports the development of domestic refining technology, it could help strengthen India’s position in global battery and advanced manufacturing supply chains. Reducing dependence on imported processed minerals will remain a gradual process rather than an immediate outcome.
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