Critical Mineral Processing Scheme

November 05, 2026
Current Affairs

Critical Mineral Processing Scheme

Source: The Indian Express and Hindustan Times

Syllabus: GS III: Economy, mineral resources, industrial policy, energy security. GS II: Government policies and interventions

Items in italics are facts added from general knowledge, not from the source articles. Please verify them before use.

Why in news?

The Union Cabinet has approved the Critical Mineral Processing Scheme, a ₹2,814 crore capital expenditure (capex) support scheme to build domestic processing capacity for critical minerals, mainly lithium and nickel. It aims to cut dependence on imported refined materials and reduce strategic vulnerability to China's dominance.

Key features

*Feature*	Details
*Outlay*	₹2,814 crore
*Duration*	Five years, FY 2026-27 to FY 2030-31
*Support*	30% capital subsidy on eligible investment
*Plants*	Four: two for lithium, two for nickel
*Lithium*	Minimum 30,000 tonnes per plant; maximum support ₹500 crore per beneficiary
*Nickel*	Minimum 50,000 tonnes per plant; maximum support ₹900 crore per beneficiary

Selection: A two-stage process, technical qualification then financial bidding. Two beneficiaries per mineral are chosen on a least-cost basis, favouring bidders who ask for the lowest government support.
Disbursal: In three tranches, linked to milestones.
Objective: Convert ores and intermediates into high-purity compounds. Nickel processing is expected to also yield cobalt as a by-product.
Industry view: Stakeholders welcomed it as a step towards closing the processing gap. Attero stressed that domestic processing matters as much as access to mineral resources.

Significance

1. Reducing import dependence

India relies heavily on imports of refined critical minerals, including lithium, nickel, cobalt, rare earth elements (REEs) and silicon.
The scheme promotes domestic beneficiation and processing, cuts dependence on refined intermediates, and adds value and supply-chain resilience.

2. Countering China's dominance

China controls about 90% of global critical mineral processing capacity and can use this as leverage in trade tensions.
Limited Indian capacity exposes the country to supply disruption, price volatility and geopolitical risk.
Domestic processing supports economic security, technological self-reliance and strategic autonomy.

3. Supporting strategic industries

Electric vehicles and batteries, battery energy storage systems (BESS).
Electronics and semiconductors.
Defence and speciality steel.
Chemicals, catalysts and pharmaceuticals.

Complementary initiatives

National Critical Minerals Mission (NCMM): Covers exploration, mining, processing, recycling and international partnerships. It was approved in January 2025 with an outlay of ₹16,300 crore and a further ₹18,000 crore expected from PSUs and other entities.
National Critical Mineral Stockpile Programme: ₹500 crore for reserves, mission period 2024-25 to 2030-31, to keep strategic minerals available during supply shocks.
Recycling support: Existing support for recovering critical minerals from used batteries and e-waste complements primary processing. A ₹1,500 crore recycling incentive scheme was approved in September 2025.
Other related steps: the KABIL overseas-asset vehicle, the Mines and Minerals (Development and Regulation) Amendment Act, 2023, which added critical minerals, and auctions of critical mineral blocks.

Critical analysis

Strengths: Targets the processing bottleneck, not just mining, and the least-cost bidding keeps the fiscal burden low.
Limits: Only four plants is modest against India's demand. Raw material access (most lithium and nickel ore is imported), technology gaps, environmental impact of processing, and skilled workforce needs remain open. China's lead rests on decades of scale, technology and low-cost processing.

Conclusion

The scheme is an important step in moving India from an import-dependent consumer of critical mineral compounds to a competitive domestic processing and value-addition hub, strengthening supply-chain security for its clean energy and strategic industries.