India approves ₹2,814 Cr scheme to boost domestic lithium and nickel processing

Scheme aims to reduce import dependence

The Indian Union Cabinet has approved a ₹2,814 Cr scheme to promote domestic processing of lithium and nickel, two critical minerals for industries like electric mobility, energy storage, electronics, defence, and speciality steel. India currently relies entirely on imports for these minerals, exposing supply chains to geopolitical risks and price volatility.

The scheme is designed to address this vulnerability by establishing four processing plants—two for lithium and two for nickel—over a five-year period starting in FY27. The goal is to retain value within India and strengthen domestic supply chains for sectors driving the clean energy transition.

Subsidies linked to investment milestones

Under the scheme, beneficiaries will receive capital subsidies covering 30% of their eligible investment. These subsidies will be disbursed in tranches upon reaching predefined milestones. For lithium processing, the maximum subsidy per beneficiary is capped at ₹500 Cr, while nickel processing projects can receive up to ₹900 Cr.

Nickel processing plants must have a minimum capacity of 50 kilo-tonnes, and cobalt, another critical mineral, is expected to be recovered as a by-product of nickel production. The scheme aims to create capacity that can directly support multiple industries, reducing reliance on imports.

Selection process and timeline

Applicants will be selected through a two-stage process: first, based on technical qualifications, and then through financial bidding. The least-cost criterion will determine the winners, meaning qualified applicants seeking the lowest capital expenditure support will be prioritised.

Incentives will be disbursed in three tranches, tied to the achievement of specific milestones. The scheme will run from FY27 to FY31, aligning with India’s broader push to localise critical mineral supply chains.

Broader context for India’s mineral strategy

This scheme follows a December 2025 decision by the Union Cabinet to allocate ₹1,500 Cr for developing recycling capacity for critical minerals, targeting at least 270 kilotons of annual capacity. Together, these initiatives reflect India’s efforts to secure domestic supply chains for minerals essential to its decarbonisation and industrial growth goals.

What this means

Lazyfounder analysis — our interpretation, not reported fact.

This scheme signals a structured push by the Indian government to localise critical mineral processing, a move that could reshape supply dynamics for startups and industries reliant on lithium and nickel. For founders in electric mobility, energy storage, and electronics, the initiative offers a potential reduction in import costs and supply chain risks, but it also raises the bar for domestic competition. Operators should note the milestone-linked subsidy structure, which rewards execution speed and efficiency—key factors in securing funding under the scheme. The focus on least-cost selection may also encourage innovation in processing technologies, creating opportunities for startups developing cost-effective or alternative solutions. However, the timeline (FY27–FY31) means immediate reliance on imports will persist, so existing players must continue diversifying suppliers while monitoring domestic capacity developments.

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