The Union Cabinet has approved the Capital Expenditure (CAPEX) Support Scheme to Promote Critical Mineral Processing on November 4, 2026, with a total budgetary allocation of ₹2,814 crore. The five-year scheme, covering FY 2026-27 to FY 2030-31, aims to strengthen India’s domestic critical mineral processing capabilities, reduce import dependence and support the country’s growing clean energy and advanced manufacturing sectors. The initiative is expected to attract approximately ₹10,000 crore in private investment.
Critical minerals such as lithium, nickel, cobalt, graphite and rare earth elements are essential for electric vehicles, battery energy storage systems, electronics, defence equipment and speciality steel manufacturing. Although India has identified 24 critical minerals, the country remains heavily dependent on imports for refined and high-purity materials. Concentration of global mineral processing in a limited number of countries has exposed Indian industries to supply chain disruptions, price fluctuations and geopolitical uncertainties.
The new scheme seeks to address these challenges by providing financial assistance for establishing domestic processing facilities. High initial investment requirements, advanced technological needs and strict environmental standards have previously limited the development of large-scale mineral processing infrastructure in India.
Under the scheme, the government will provide a 30% capital subsidy for establishing four large-scale processing facilities, comprising two lithium processing plants and two nickel processing plants. Each lithium facility must have a minimum processing capacity of 30 kilotonnes (kt), while each nickel facility must have at least 50 kt of capacity.
The lithium plants will process ores and concentrates, excluding brines, into battery-grade products. Meanwhile, nickel facilities will manufacture Class-1 nickel or battery-grade nickel sulphate, along with recovering cobalt as an additional product.
The financial assistance will be capped at ₹500 crore for each lithium plant and ₹900 crore for each nickel plant. This represents a total subsidy allocation of ₹2,800 crore, while the remaining ₹14 crore will be used for administrative expenses. Once fully operational, the four facilities are expected to establish 60 kt of lithium and 100 kt of nickel processing capacity by 2030.
The selection of beneficiaries will follow a transparent two-stage competitive bidding process. Applicants will first undergo technical evaluation, followed by financial bidding among qualified companies. Projects will be awarded based on the least-cost principle, giving preference to applicants seeking the lowest capital subsidy.
Financial support will be released in three instalments linked to project progress. The first 25% will be provided after achieving 25% of committed capital expenditure (CAPEX) and a 15% equity contribution. Another 25% will be released after reaching 50% of committed CAPEX and equity contribution. The remaining 50% will be disbursed following plant commissioning and completion of the full equity contribution.
Selected companies must commission their facilities within three years of receiving the Letter of Award. A tapering penalty mechanism will apply to projects facing delays, with an overall maximum commissioning period of five years.
Implementation will be monitored through a three-tier governance structure consisting of an Apex Governing Council chaired by the Mines Secretary, a Techno-Financial Committee and a Project Management Agency.
Industry stakeholders have also highlighted the importance of strengthening India’s wider battery manufacturing ecosystem. They believe capital subsidies and sales-linked incentives could encourage investments in domestic component manufacturing, advanced technologies and local sourcing, improving cost competitiveness and reducing dependence on imported components.
Industry representatives have further emphasized the need to maintain quality, performance, safety standards and technological innovation. They have also called for testing and certification facilities to support smaller manufacturers, particularly in specialized sectors such as drones and aviation.
Saurabh Jain, CEO, Energy Storage, GEON
“The proposed capital subsidies of up to 50% and sales-linked incentives could be a significant step towards strengthening India’s domestic battery manufacturing ecosystem. As the demand for electric mobility and energy storage solutions grows, building a reliable local supply chain for battery components will be essential to reducing import dependence and improving cost competitiveness. Such incentives can encourage investments in manufacturing capacity, advanced technologies and component development, while creating opportunities for domestic players to scale their capabilities. However, the focus must also remain on quality, performance, safety standards and technological innovation to ensure that Indian manufacturers can compete globally. A strong domestic battery ecosystem will not only support the growth of the electric mobility sector but also strengthen India’s broader energy transition ambitions.”
Kajal Shah is the CEO and Co-Founder of Dreamfly Innovations.
The proposed incentives are certainly a good initiative, because a battery is only as robust as the supply chain behind it. Manufacturing the components that go into a battery inside the country should go a long way towards ensuring consistent supply, better lead times, and a more dependable production process that suits Indian conditions. In the long run, it should also help with costs, through lower logistics expenses, less exposure to currency swings and fewer delays. In specialized fields such as drones and aviation, where volumes are low but consistency is critical, it would help if the policy also covers testing and certification facilities, so that smaller manufacturers can benefit too. This can strengthen the wider battery ecosystem in India, provided that it’s done well.
Udyut Goyal, Business Development Head, AmpereHour Energy
“The proposed capital subsidies and sales-linked incentives could provide a significant boost to India’s ambition of building a robust domestic battery manufacturing ecosystem. While India has made considerable progress in battery energy storage deployment, strengthening the component manufacturing base will be equally important to reduce import dependence and build a resilient supply chain. Incentives of up to 50% can encourage investments in domestic manufacturing capabilities, advanced technologies and local sourcing, while helping manufacturers achieve economies of scale and improve cost competitiveness. However, the long-term impact will depend on how effectively these measures translate into technology development, quality standards and sustained industry participation. As renewable energy integration and grid-scale storage requirements grow, developing a strong domestic battery ecosystem will be critical to ensuring energy security, supporting the clean energy transition and positioning India as a competitive player in the global energy storage market“.
The scheme complements the National Critical Mineral Mission launched in January 2025, the ₹1,500 crore critical mineral recycling scheme and the auction of 64 critical mineral blocks. Together, these initiatives aim to develop an integrated domestic critical mineral ecosystem, strengthen supply chain resilience, generate employment and support India’s long-term clean energy ambitions and Atmanirbhar Bharat objectives.
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