Cabinet clears Rs 2,814 crore scheme for lithium, nickel processing plants

The Union Cabinet on Wednesday, 4 November 2026 approved a Rs 2,814 crore scheme to help companies build large plants in India for processing lithium and nickel, two minerals used in electric vehicle batteries and energy storage. The scheme will give a capital subsidy of 30% of eligible investment to four plants, two for lithium and two for nickel, over five years from 2026-27 to 2030-31. Support is capped at Rs 500 crore for each lithium plant and Rs 900 crore for each nickel plant, and the nickel plants will also recover cobalt as a by-product. Union Minister Ashwini Vaishnaw announced the decision at the Cabinet briefing.

Electric vehicles, phones and grid batteries need lithium, nickel and cobalt in very pure chemical forms. According to the government, India's own capacity to turn ores into such battery-grade chemicals is still at a nascent stage, so it relies on imports of refined materials. That leaves Indian battery makers dependent on imported processed materials, and exposed to supply disruptions and price swings.

This scheme targets the middle of the supply chain: the processing plants. By paying 30% of the building cost, the government lowers the risk for companies that would otherwise hesitate to invest in a new and capital-heavy industry. It follows other recent Cabinet decisions on the battery supply chain, including a scheme for grid-scale energy storage approved at the same meeting.

For Indian businesses, the scheme opens a door for mining, chemicals and battery companies to move into refining. It also matters for MSMEs that supply equipment, chemicals and services to large plants, and for states that could host the projects. The minimum plant sizes mean only large investors can apply directly.

The scheme is small in money terms compared with the scale of the battery industry, and it supports only four plants. Its success will depend on whether companies can secure ore or intermediate supplies, and on how quickly the plants are built within the five-year window.

Peepals calculation: If all four plants reach their caps, support would total Rs 2,800 crore (2 × Rs 500 crore + 2 × Rs 900 crore), close to the scheme's Rs 2,814 crore outlay. Since the subsidy is 30% of eligible investment, reaching the cap would need eligible investment of about Rs 1,667 crore for a lithium plant (500 / 0.30) and Rs 3,000 crore for a nickel plant (900 / 0.30), or about Rs 9,333 crore across all four. Our calculation from the reported figures.

Short-term: The government will invite applications and run the two-stage selection to choose the four beneficiaries.

Long-term: If the plants are built, India would produce battery-grade lithium and nickel compounds at home, reducing imports and supporting electric vehicle and storage manufacturing.

Who is affected: mining, chemical and battery companies, electric vehicle and storage manufacturers, MSME suppliers, and states that may host the plants.

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