The Capex Support Scheme to Promote Critical Mineral Processing

Context: The Union Cabinet approved the ‘Capex Support Scheme to Promote Critical Mineral Processing’ with a financial outlay of ₹2,814 crore over a five-year period (FY 2026–27 to FY 2030–31).

About The Capex Support Scheme to Promote Critical Mineral Processing:

What it is?

• A dedicated industrial incentive program that provides direct capital expenditure (CAPEX) subsidies to private and public sector companies to set up advanced mineral beneficiation, refining, and chemical processing plants in India.

Organisation: Ministry of Mines, Government of India.

Outlay & Duration: Total financial outlay of ₹2,814 crore covering a five-year operational horizon from FY 2026–27 to FY 2030–31.

Aim: To build indigenous processing and refining capabilities for strategic minerals, drive domestic value addition, substitute refined chemical imports, and secure raw material inputs for electric mobility, energy storage, and high-tech defense industries.

Critical Minerals Targeted: Primary focus on Lithium and Nickel ores/intermediates, alongside the recovery of Cobalt as an essential by-product of nickel refining.

Key Features of the Scheme:

• Direct Capital Expenditure Subsidy: Grants a capital subsidy equal to 30% of eligible investment incurred in setting up domestic refining and processing infrastructure.
• Targeted Plant Allocation & Caps: Mandates the establishment of four large-scale commercial processing plants:
  • Two Lithium Processing Plants: Minimum capacity of 30 kilotonnes (kt) each, with CAPEX support capped at ₹500 crore per beneficiary.
  • Two Nickel Processing Plants: Minimum capacity of 50 kilotonnes (kt) each, with CAPEX support capped at ₹900 crore per beneficiary.
• Two-Stage Competitive Bidding: Selects beneficiaries through technical qualification followed by financial bidding, with contracts awarded based on the least-cost criterion, ensuring transparency and cost efficiency.
• Milestone-Linked Tranche Disbursements: Fiscal incentives will be released in three performance-linked tranches, strictly tied to verified physical construction benchmarks and plant operationalization milestones.
• Cross-Sectoral Downstream Integration: Refined battery-grade salts and high-purity metal outputs are designed to feed directly into domestic advanced chemistry cell (ACC) battery manufacturing, electric vehicles, grid-scale Battery Energy Storage Systems (BESS), defense hardware, and specialty steel.

Significance:

• Reduces reliance on China-dominated mineral refining, protecting India from export restrictions, price volatility and global supply disruptions.
• Links domestic mineral exploration with EV and renewable energy manufacturing, supporting decarbonisation and Aatmanirbhar Bharat.