India approved a Rs 2,814 crore critical mineral processing scheme for lithium and nickel refineries. Here is how it works and what could slow it.
NEW DELHI: The Union Cabinet approved a Rs 2,814 crore scheme on November 4 2026 to build critical mineral processing capacity for lithium and nickel in India. The scheme runs from FY27 to FY31 under the National Critical Mineral Mission. It offers a 30 percent capital subsidy to four refineries, two per metal, that will convert ores and concentrates into battery-grade chemicals.
The approval targets a gap that policy has so far stepped around. India has auctioned mineral blocks upstream and subsidised battery cells downstream. Refining, the step between the two, still happens mostly abroad.
Why critical mineral processing is the missing middle
A lithium ore or a nickel intermediate cannot go straight into a battery. It first needs complex chemical processing to reach battery-grade purity. Reported figures put India’s critical mineral import bill at USD 8.01 billion in FY24, up from USD 3.03 billion in FY21.
Upstream, the government has auctioned 64 critical mineral blocks. Downstream, a Rs 18,100 crore Advanced Chemistry Cell scheme backs cell manufacturing. The new scheme sits between them.
What the money buys
Lithium plants must process ores and concentrates, so brine is excluded from this round. Nickel plants must produce Class-1 nickel or battery-grade nickel sulphate and recover cobalt as a by-product. Of the total outlay, Rs 2,800 crore goes to subsidy and Rs 14 crore to administration.
| PARAMETERS | Lithium | Nickel |
| Plants supported | 2 | 2 |
| Minimum capacity per plant | 30 kt | 50 kt |
| Maximum subsidy per plant | ₹500 crore | ₹900 crore |
| Corpus | ₹1000 crore | ₹1800 crore |
Selection runs in two stages. Applicants first clear a technical test. Qualified bidders then compete on the lowest subsidy they will accept, so the government pays the least it can.
Money is released in three stages tied to 25 percent of committed spending, 50 percent and full commissioning. Each stage also requires a matching share of promoter equity. Plants must start within three years of the award, and delays taper the undisbursed support. The government expects the outlay to anchor about Rs 10,000 crore in private investment.
A demand loop approved the same day
The Cabinet also cleared a Rs 14,500 crore viability gap funding scheme for 92 GWh of grid storage. It covers 60 GWh of pumped storage, 30 GWh of batteries and 2 GWh of emerging technologies. Battery projects must meet a 40 percent domestic content requirement.
That rule pushes developers towards locally made cells. Local cell makers, in turn, need locally sourced materials. Kannan Krishnan, Managing Director of Jakson Green, called the storage scheme “a defining moment in India’s energy journey”. Read together, the two decisions sketch a loop that runs from refinery to grid.
Industry is already positioning
Private players have started moving. Anurag Choudhary, CMD and CEO of Himadri Speciality Chemical, said: “Achieving true self-reliance in energy storage requires India to move beyond dependence on imported refined lithium and build indigenous capabilities across extraction, processing and refining.”
Himadri has committed Rs 4,800 crore to a lithium iron phosphate cathode plant in Odisha. Lohum has announced a 1,000 tonne battery-grade lithium refinery in Greater Noida that will use both ore and recycled battery material. Nitin Gupta, co-founder and CEO of Attero, said the support should encourage private investment and local refining technology. A separate Rs 1,500 crore scheme backs recycling.
Where it could stall
Feedstock comes first. India lacks commercially viable domestic reserves of hard-rock lithium and nickel laterite, so the refineries will lean on imported ores or intermediates. Subsidising plants without securing supply could simply shift dependence from refined chemicals to raw ore.
Technology is the second test. Spodumene calcination and high-pressure acid leaching are demanding processes, and much of the know-how sits with Chinese firms. Indian bidders will need licences, joint ventures or fast domestic research.
Timelines add pressure. Securing clearances, power and water for a greenfield refinery within 36 months is ambitious. Reverse bidding carries its own risk, because a bidder who cuts too deep may find actual costs higher.
The design choice itself is instructive. The United States pays producers after output through tax credits. India pays upfront, which suits a market with higher capital costs and a young processing sector.
The first real signal will come from the bids. If the four winning plants arrive with technology partners and secured ore, India gets a midstream. If they arrive with only subsidy requests, it gets a pilot.
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