₹2,814 Crore Scheme to Process Lithium and Nickel in India

In news

• The Union Cabinet (4 November 2026) approved the Capex Support Scheme to Promote Critical Mineral Processing.
• Outlay: ₹2,814 crore. Period: 2026-27 to 2030-31.
• Aim: turn lithium and nickel ores into high-purity compounds within India.

Key facts

Item	Detail
Outlay	₹2,814 crore (lithium: ₹1,000 crore; nickel: ₹1,800 crore)
Support	30% capital subsidy on eligible investment
Plants	4: two lithium, two nickel
Cap per plant	₹500 crore (lithium); ₹900 crore (nickel)
Minimum capacity	30 kilotonnes (lithium); 50 kilotonnes (nickel)
Selection	Two stages: technical qualification, then bidding on lowest subsidy sought
Release	Three instalments, linked to milestones
By-product	Cobalt recovered from nickel processing

Why processing matters

• Mining is only the first step. Ore must be refined into battery-grade chemicals.
• India imports most of these refined intermediates and high-purity materials.
• China dominates processing: it refines about 90% of rare earths and well over half of the world's lithium and cobalt.
• China has used export controls on gallium, germanium and rare earths since 2023. This exposed the risk of depending on one country.
• India's nickel demand is set to double, from about 50 kilotonnes (2025) to 100 kilotonnes (2030).

Uses

• Lithium, nickel and cobalt: cathodes of lithium-ion batteries for electric vehicles and energy storage.
• Nickel: also used in stainless steel and special alloys.
• Target sectors: electric mobility, battery storage, defence, electronics, special steel.

Link to energy storage

• On the same day, the Cabinet cleared a ₹14,500 crore scheme for 92 GWh of energy storage.
• Battery storage needs lithium and nickel. Domestic processing supports the 40% domestic content rule for battery projects.

India's critical minerals journey

• 2019: KABIL (Khanij Bidesh India Ltd) set up to secure minerals abroad; a joint venture of NALCO, Hindustan Copper and MECL. It has lithium blocks in Argentina.
• 2023: list of 30 critical minerals released by the Ministry of Mines.
• 2023: MMDR Amendment Act let the Centre auction critical minerals and opened exploration to private firms.
• 2023: 5.9 million tonnes of inferred lithium resources reported in Reasi, Jammu and Kashmir.
• 2023: India joined the US-led Minerals Security Partnership.
• 2025: National Critical Mineral Mission: ₹16,300 crore, plus ₹18,000 crore from public sector companies.
• 2025: ₹1,500 crore scheme for recycling critical minerals from e-waste and old batteries.
• 2025: ₹7,280 crore scheme for rare earth permanent magnets.

Challenges

• Processing is energy-intensive and needs advanced technology, which India lacks at scale.
• Domestic ore is limited, so plants may depend on imported ore.
• Pollution and waste from chemical refining need strict control.
• Long gestation; global prices of lithium and nickel are volatile.

Static connect

• Critical minerals: minerals essential for the economy and national security, whose supply is at risk (few sources, high import dependence).
• Examples: lithium, cobalt, nickel, graphite, rare earth elements, gallium, germanium, tungsten.
• Mines and Minerals (Development and Regulation) Act, 1957: the main law on mining; amended in 2015, 2021 and 2023.

Exam relevance: UPSC Prelims and GS-3 (Economy, Mineral resources, Industry), GS-2 (International relations); TGPSC, APPSC (Economy, Geography).