The Union Cabinet on Wednesday approved a ₹2,814-crore capital expenditure support scheme to promote domestic processing of critical minerals, targeting the setting up of four plants for lithium and nickel, Information and Broadcasting Minister Ashwini Vaishnaw said.

The scheme, which will run for five years from FY27 to FY31, will provide a capital subsidy of 30 per cent of eligible investment for setting up two lithium processing plants and two nickel processing plants.

The two lithium plants will have a minimum processing capacity of 30,000 tonnes each, while the two nickel plants will have a minimum capacity of 50,000 tonnes each. The maximum capital support will be capped at ₹500 crore per lithium beneficiary and ₹900 crore per nickel beneficiary, according to a statement issued by the Cabinet.

The scheme aims to establish domestic processing facilities to convert lithium and nickel ores and intermediary products into high-purity compounds. Cobalt is also expected to be recovered as a by-product of nickel production.

The facilities are expected to support critical sectors such as electric mobility, battery energy storage systems (BESS), electronics, defence and speciality steel.

The processing of critical minerals remains geographically concentrated in a few global locations, exposing supply chains to geopolitical disruptions, price volatility and potential supply restrictions. This poses risks to supply chain resilience and economic security, the Cabinet said in a statement.

India remains substantially dependent on imports for refined intermediates and high-purity materials because domestic beneficiation and processing infrastructure for critical minerals, including lithium, nickel and cobalt, is still at a nascent stage.

The Cabinet said domestic processing capacity remained limited, with commercial-scale projects facing challenges such as high capital requirements, limited availability of suitable technologies and constrained access to raw materials. Building domestic capacity is therefore important for increasing value addition within the country, reducing import dependence and establishing resilient end-to-end value chains.

Beneficiaries under the scheme will be selected through a two-stage process. Applications will first be assessed for technical qualification, with only eligible applicants allowed to participate in the subsequent financial bidding process.

For each mineral, two beneficiaries will be selected on the basis of the least-cost criterion, meaning those seeking the lowest capital expenditure support from the government. The incentives will be disbursed in three tranches linked to the achievement of specified milestones.

The scheme is intended to advance the government's Atmanirbhar Bharat objective by developing domestic processing infrastructure and strengthening India's capabilities across the critical mineral value chain.