India Approves ₹2,814 Crore Scheme to Build Its First Large-Scale Lithium and Nickel Refining Plants

India's Union Cabinet has approved a ₹2,814 crore scheme to support the construction of large-scale lithium and nickel refining plants. It is one of the government's most direct steps so far to build a domestic supply chain for the materials that power electric vehicles, batteries and electronics.

Information and Broadcasting Minister Ashwini Vaishnaw announced the decision after a Cabinet meeting on Wednesday, November 4. The scheme, worth about $297 million, will run from FY2026-27 to FY2030-31.

It will offer a 30% capital subsidy to companies that set up four processing plants: two for lithium and two for nickel. These plants will convert ores and intermediate materials into the high-purity compounds required by battery manufacturers.

How the scheme works

Under the scheme, each of the two lithium plants must have a minimum capacity of 30,000 tonnes a year. The subsidy for each lithium beneficiary is capped at ₹500 crore.

Each of the two nickel plants must have a minimum capacity of 50,000 tonnes a year, and the subsidy for each nickel beneficiary is capped at ₹900 crore.

Beneficiaries will be chosen through a two-stage selection process. The government has set minimum capacity thresholds to ensure that the plants operate at commercial scale, rather than as small pilot facilities.

The focus on refining is deliberate. India has been working to secure access to raw lithium and nickel through overseas mining partnerships and domestic exploration. Without processing capacity, however, any ore India mines or buys would still have to be sent abroad for refining, leaving the country dependent on foreign processors.

Closing a gap in the supply chain

Refining is the stage of the critical minerals supply chain where global capacity is most concentrated. A large share of the world's lithium and nickel processing takes place in a small number of countries, with China dominant across most battery materials.

For India, this creates a vulnerability. Even if Indian companies build battery cell factories, which the government is supporting through separate production-linked incentive schemes, they would still need to import refined materials. Disruptions to that supply, whether from trade restrictions, geopolitical tensions or price spikes, could hold back India's electric vehicle and energy storage ambitions.

The new scheme aims to create domestic capacity at this critical point in the chain. By subsidising 30% of capital costs, the government hopes to make large refining projects commercially viable for Indian companies, which might otherwise struggle to compete with established foreign processors on cost.

Part of a larger national mission

The refining scheme is part of the National Critical Mineral Mission, which the government approved in January 2025 with a total outlay of ₹34,300 crore. The mission covers exploration, mining, processing, recycling and the acquisition of mineral assets abroad.

In September 2025, the government approved a separate ₹1,500 crore scheme to support the recycling of critical minerals from used batteries and electronic waste. Together with the new refining scheme, these programmes form a policy framework intended to cover the full lifecycle of critical minerals, from extraction to reuse.

Prime Minister Narendra Modi has repeatedly stressed the strategic importance of these materials. "Lithium, nickel, cobalt…these are essential for EVs, batteries, electronics and defence," he has said, framing access to critical minerals as a matter of economic and national security as well as industrial policy.

Why lithium and nickel

Lithium and nickel are two of the most important materials in modern batteries. Lithium is the core element in lithium-ion batteries, which power electric vehicles, smartphones, laptops and grid-scale energy storage systems. Nickel is a key component of the cathodes used in many high-performance battery chemistries, particularly those used in long-range electric vehicles.

Demand for both metals is expected to grow sharply over the coming decades as countries electrify transport and expand renewable energy. India has set targets to increase the share of electric vehicles in new sales and to build large amounts of battery storage to support its solar and wind capacity.

Meeting those goals will require reliable access to refined lithium and nickel at competitive prices. Domestic refining would reduce exposure to global supply shocks and could also create opportunities for India to supply other markets.

Industry and investment implications

The scheme is likely to attract interest from large Indian industrial groups with experience in metals, chemicals and energy. Building refining plants of the required size involves significant capital, technical expertise and access to raw materials, which limits the number of companies able to take part.

Securing feedstock will be one of the main challenges for any beneficiary. India has limited proven reserves of lithium and nickel, although exploration is under way, including at lithium deposits identified in recent years. Plants are likely to rely at least partly on imported ores and intermediate products, sourced through long-term contracts or overseas mining stakes.

Indian state-owned company KABIL (Khanij Bidesh India Ltd) has been pursuing lithium assets abroad, including in Argentina and Australia. These overseas efforts could eventually feed into domestic refining capacity.

Technology is another consideration. Refining lithium and nickel to battery-grade purity requires specialised processes. Some companies may seek partnerships with foreign technology providers to accelerate their projects.

Environmental considerations

Refining critical minerals can have significant environmental impacts, including high energy and water use and the production of chemical waste. As the scheme moves from approval to implementation, environmental standards and the location of plants will be important issues.

For India's clean energy transition to deliver on its promise, the supply chains that support it will need to meet high environmental standards. Investors and international buyers are increasingly scrutinising the environmental footprint of battery materials, which could shape how Indian refiners design and operate their plants.

A strategic bet on the energy transition

The scheme reflects a wider shift in Indian industrial policy. Rather than relying solely on imports for the inputs of new technologies, the government is trying to build domestic capacity across strategic supply chains. Semiconductors, solar modules, batteries and now critical minerals have all been the subject of major incentive programmes.

At ₹2,814 crore, the refining scheme is modest compared with some of those programmes. But its significance lies in where it intervenes. By targeting refining, a bottleneck in the global battery supply chain, the government hopes to unlock larger private investment and strengthen the foundations of India's electric vehicle and energy storage industries.

For the global Indian diaspora working in mining, chemicals, batteries and clean energy, the scheme signals growing opportunities in a sector that India regards as strategically important.

What comes next

The government will now need to set out detailed guidelines and launch the selection process for beneficiaries. The timeline running to FY2030-31 suggests that the first plants could begin operating in the second half of the decade.

Much will depend on the response from industry, the availability of feedstock and the pace of construction. If the scheme succeeds, India could have its first commercial-scale lithium and nickel refining capacity within the next few years. That would be an important step towards reducing the country's dependence on imported battery materials.