# Cabinet approves ₹2,814 crore capex scheme for lithium and nickel processing plants

URL: https://upsc.help/current-affairs/2026-11-04/critical-mineral-processing-capex-scheme/
Date: 4 November 2026 (2026-11-04)
Source: PIB, Government release
UPSC papers: GS3, GS2
Publisher: upsc.help (Pratidin), free and open-source UPSC Civil Services current affairs. Not affiliated with UPSC. Every fact was checked against the source reports by a separate review before publishing.

**In one line:** The Centre will pay up to 30% of the capital cost of two lithium and two nickel processing plants, so that India refines the battery minerals it now imports.

On 4 November 2026 the Union Cabinet, chaired by Prime Minister Narendra Modi, approved a Capital Expenditure Support Scheme for Promoting Critical Mineral Processing with an outlay of ₹2,814 crore. Union Minister Ashwini Vaishnaw briefed the media on the decision. The scheme runs for five years, from 2026-27 to 2030-31. It will give a capital subsidy of 30% of eligible investment to set up domestic plants that convert lithium and nickel ores or intermediates into high-purity compounds. Cobalt is to be recovered as a by-product of nickel production.

Only four plants will be supported: two lithium processing plants, each with a minimum capacity of 30,000 tonnes, and two nickel processing plants, each with a minimum capacity of 50,000 tonnes. Support is capped at ₹500 crore per lithium beneficiary and ₹900 crore per nickel beneficiary. Selection has two stages: a technical eligibility check, then financial bidding in which the two applicants per mineral seeking the lowest capital subsidy are chosen. Incentives will be paid in three tranches linked to targets. The output is meant for electric mobility, battery energy storage systems, electronics, defence and specialty steel.

The government says India's processing capacity for these minerals is at an early stage and that the country relies heavily on imports of refined intermediates and high-purity materials, while processing worldwide "remains geographically concentrated in a few global locations". It lists high capital needs, limited access to technology and constrained access to raw materials as the main hurdles. The scheme adds a processing layer to the National Critical Mineral Mission approved in January 2025 and the ₹1,500 crore recycling incentive scheme approved in September 2025. Its success will depend on whether the plants can secure feedstock, given the constrained access to raw materials the government itself acknowledges.

## Prelims facts

- The Cabinet approved a ₹2,814 crore capex support scheme for critical mineral processing on 4 November 2026, for 2026-27 to 2030-31.
- It gives a 30% capital subsidy to two lithium plants (at least 30,000 tonnes each) and two nickel plants (at least 50,000 tonnes each).
- Subsidy caps are ₹500 crore per lithium beneficiary and ₹900 crore per nickel beneficiary; cobalt will be recovered from nickel.
- Winners are chosen by least-cost bidding after a technical test, and paid in three target-linked tranches.
- It complements the National Critical Mineral Mission (January 2025) and the ₹1,500 crore recycling scheme (September 2025).

## Quick recall

- **Outlay and period of the 2026 critical mineral processing capex scheme?** ₹2,814 crore over five years, 2026-27 to 2030-31.
- **Rate of capital subsidy under the scheme?** 30% of eligible investment.
- **Minimum capacity of each lithium plant supported?** 30,000 tonnes.
- **Minimum capacity of each nickel plant supported?** 50,000 tonnes.
- **Subsidy cap per lithium and per nickel beneficiary?** ₹500 crore (lithium) and ₹900 crore (nickel).
- **Which mineral is to be recovered as a by-product of nickel processing?** Cobalt.
- **When was the National Critical Mineral Mission approved, and its government outlay?** 29 January 2025; ₹16,300 crore of government spending plus ₹18,000 crore expected from PSUs and others.
- **Recycling capacity target of the 2025 critical mineral recycling scheme?** At least 270 kilotonnes a year, yielding about 40 kilotonnes of critical minerals.

## Prelims practice question

With reference to the Capital Expenditure Support Scheme for Promoting Critical Mineral Processing approved in November 2026, consider the following statements:
1. It provides a capital subsidy of 30% of eligible investment.
2. It will support two lithium and two nickel processing plants.
3. Beneficiaries are chosen on the basis of the highest committed production capacity.
Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer: (a) 1 and 2 only. Statements 1 and 2 are correct: the subsidy is 30% of eligible investment and the scheme covers two lithium and two nickel plants. Statement 3 is wrong: after a technical test, the two applicants per mineral seeking the lowest capital subsidy are selected.

## UPSC previous-year questions this connects to

- UPSC Prelims 2025, Prelims: Consider the following statements: I. India has joined the Minerals Security Partnership as a member. II. India is a resource-rich country in all the 30 critical minerals that it has identified. III. The Parliament in 2023 has amended the Mines and Minerals (Development and Regulation) Act, 1957 empowering the Central Government to exclusively auction mining lease and composite license for certain critical minerals. Which of the statements given above are correct? (a) I and II only (b) II and III only (c) I and III only (d) I, II and III (https://upsc.help/pyq/q072-consider-following-statements-i-india-has-joined/)
- UPSC Mains 2024, GS2: 'The West is fostering India as an alternative to reduce dependence on China's supply chain and as a strategic ally to counter China's political and economic dominance.' Explain this statement with examples. (https://upsc.help/pyq/q070-west-fostering-india-alternative-reduce-dependence-china/)
  How to use this story in the answer: Show that India is building its own processing capacity so that partners can treat it as an alternative to concentrated supply chains.
- UPSC Mains 2025, GS3: How can India achieve energy independence through clean technology by 2047? How can biotechnology play a crucial role in this endeavour? (https://upsc.help/pyq/q063-can-india-achieve-energy-independence-through-clean/)
  How to use this story in the answer: Use the scheme as an example of securing the mineral inputs of clean technology, such as batteries for electric vehicles and grid storage.

## Mains practice question

Domestic processing, not mining alone, will decide India's security of critical mineral supply. Discuss in the light of the capex support scheme for lithium and nickel processing approved in 2026. (250 words)

### Model answer

On 4 November 2026 the Cabinet approved a ₹2,814 crore scheme giving a 30% capital subsidy to two lithium and two nickel processing plants, recognising that refining is India's weakest link in the critical minerals chain.

## Why processing is the bottleneck
- **Concentration:** the Cabinet notes processing "remains geographically concentrated in a few global locations".
- **Import dependence:** India relies heavily on imported refined intermediates and high-purity materials.
- **Value addition:** ore or mines abroad do not help if refining happens elsewhere.
- **Uses:** electric mobility, battery storage, electronics, defence and specialty steel need these compounds.

## What the scheme does
- 30% capex subsidy over 2026-27 to 2030-31.
- Lithium plants of at least 30,000 tonnes, nickel plants of at least 50,000 tonnes; cobalt as a by-product.
- Caps of ₹500 crore (lithium) and ₹900 crore (nickel) per beneficiary.
- Least-cost bidding after technical screening; three target-linked tranches.

## Limits
- Four plants are a start, not a full value chain.
- Access to raw materials is constrained, so feedstock may still be imported.
- Refining is energy, water and waste intensive.

## Way forward
- Link plants to overseas assets under the National Critical Mineral Mission, such as KABIL's lithium blocks in Argentina.
- Feed them recycled material through the ₹1,500 crore recycling scheme (270 kilotonnes capacity target).
- Build processing parks, a stockpile and research capacity, as the Mission envisages.

Mining secures ore, but only domestic refining, backed by feedstock and recycling, can turn it into real supply security.

## The basics

## Why this matters
India can dig up ore, or buy it abroad, but a battery maker needs high-purity chemicals such as lithium carbonate or nickel sulphate. Turning ore into these chemicals is called processing or refining, and India's capacity for it is at an early stage. On 4 November 2026 the Union Cabinet approved a ₹2,814 crore scheme to pay part of the cost of building the first large plants. Prelims can ask about the scheme's design; Mains asks about supply chains, import dependence and energy transition.

## What processing means
Mining gives ore. Beneficiation concentrates it. Processing turns the concentrate or an imported intermediate into a high-purity compound that a factory can use. The Cabinet note says processing of critical minerals "remains geographically concentrated in a few global locations", so a country without refineries depends on others even if it owns mines.

## How the scheme works
The scheme runs for five years, 2026-27 to 2030-31. It offers a capital subsidy of 30% of eligible investment. Only four plants will be supported: two for lithium, each of at least 30,000 tonnes a year, and two for nickel, each of at least 50,000 tonnes. Cobalt will be recovered as a by-product of nickel. Applicants first pass a technical test; the technically eligible then bid, and the two asking for the least subsidy for each mineral win. Money is paid in three tranches linked to targets.

## Where it fits
The scheme is one piece of a larger policy. The National Critical Mineral Mission (2025) covers the whole chain from exploration to recycling, and a separate Critical mineral recycling scheme (2025) supports recovery from scrap. This scheme fills the middle: Critical mineral processing. Its design, a Capital subsidy and least-cost bidding, is meant to keep the cost to the public low.

## Sources

- https://www.pib.gov.in/PressReleasePage.aspx?PRID=2332544
- https://www.tribuneindia.com/news/business/cabinet-approves-rs-2814-crore-capex-scheme-for-domestic-lithium-and-nickel-processing
- https://www.tribuneindia.com/news/business/cabinet-approves-national-critical-mineral-mission-to-build-a-resilient-value-chain-with-an-outlay-of-rs-34300-cr-over-seven-years
- https://www.newsonair.gov.in/cabinet-approves-incentive-scheme-to-promote-critical-mineral-recycling
- https://www.nextias.com/ca/headlines-of-the-day/04-11-2026/87907