Why in news?
The Union Cabinet approved the Capex Support Scheme to Promote Critical Mineral Processing on 4 November 2026. The Ministry of Mines will implement the scheme, with an outlay of ₹2,814 crore for 2026–27 to 2030–31. It will support two lithium and two nickel processing plants. Processing turns mineral-bearing inputs into high-purity materials needed by industry. The scheme addresses the expensive facilities and technical capabilities required between extracting a mineral and using it in manufactured products.
Where processing fits in the value chain
A mineral value chain connects the extraction of a resource with the materials and products made from it. Ore contains useful minerals mixed with other material. Beneficiation separates and concentrates the useful mineral content. Further processing and refining produce materials with the composition and purity required by their industrial users.
These stages can take place in different countries. A country may mine a mineral while relying on overseas facilities to process it. The Cabinet’s announcement identifies India’s dependence on imports of refined intermediates and high-purity materials. An intermediate is a material that undergoes further processing before reaching its final industrial use.
Which materials the scheme targets
The lithium plants will process ores and concentrates into battery-grade products; the scheme’s lithium coverage excludes brines. A concentrate contains a greater proportion of the useful mineral after earlier separation. Brines are salt-rich waters from which dissolved lithium can be recovered through a different production route.
The nickel plants are intended to produce Class-1 nickel or battery-grade nickel sulphate. Cobalt is also expected to be recovered as a by-product of nickel processing. A by-product is a secondary material recovered alongside the main product. These materials supply uses such as batteries, electronics, defence equipment and speciality steel.
Battery grade refers to material meeting the chemical-quality requirements for battery production. Manufacturing depends on consistent inputs, so purification and quality control are important parts of the chain. Producing a concentrate and supplying a material suitable for a battery factory require different processing capabilities.
What capital support pays towards
Capital expenditure, or CAPEX, is spending on assets such as plant, machinery and processing equipment. Such facilities require substantial investment before they begin commercial production. The Cabinet identified high capital requirements, limited access to suitable technology and constrained raw-material access as barriers to domestic projects.
The scheme provides a 30% subsidy on eligible investment, subject to maximum support of ₹500 crore per lithium beneficiary and ₹900 crore per nickel beneficiary. The eligible-investment rule and the beneficiary cap work together to define support. The scheme plans to select two beneficiaries for each mineral.
How projects will be selected and paid
Selection has two stages. Applications first undergo technical assessment. Qualified applicants then enter financial bidding, where selection follows the lowest CAPEX support sought. This connects an applicant’s ability to undertake the project with the public assistance it requests.
Payments will be released in three tranches linked to specified milestones. The ministry’s backgrounder links these to committed investment, equity contributed by the beneficiary and plant commissioning. Commissioning is the stage at which the completed plant is brought into working condition. Milestone-linked payments connect the release of assistance with progress on the facility.
Why the location of refining matters
The International Energy Agency’s 2025 assessment found that mineral refining had become more concentrated among a small group of supplier countries. Concentration means that disruptions affecting a few locations can affect many buyers. Building additional processing capability is one way to diversify the available routes through a supply chain.
Domestic plants also need suitable raw materials, technology, operating skills and buyers for their output. Capital assistance addresses the initial investment requirement within that wider industrial system. The proposed facilities aim to retain more processing activity and value addition within India.
Conclusion
The scheme focuses on the link between mineral-bearing inputs and usable high-purity industrial materials. Its selection process combines technical qualification with competitive requests for capital support. Progress on investment, equity and commissioning will connect that support with the development of processing facilities.