India’s New CAPEX Support Scheme for Critical Minerals

1. Why India Needs This Scheme

• Heavy Import Dependence: Global refining of lithium, nickel, and cobalt is controlled by very few countries (mainly China), leaving India vulnerable to supply cuts and price spikes.
• High Setup Cost: Turning raw mineral ore into pure, battery-grade material requires costly technology and strict pollution control. Government funding makes these expensive projects financially viable for private companies.

2. Scheme Targets & Financial Support

Running for 5 years (FY 2026–27 to FY 2030–31), the scheme gives a 30% capital subsidy to attract around ₹10,000 crore in private investment:

• Lithium Refining (2 Plants): Converts hard-rock ores (excluding salt-flat brines) into battery-grade lithium. Minimum capacity of 30,000 tonnes per plant (60 kt total by 2030), with a subsidy limit of ₹500 crore per plant.
• Nickel Refining (2 Plants): Produces Class-1 nickel or battery-grade nickel sulphate (with cobalt recovered as a by-product). Minimum capacity of 50,000 tonnes per plant (100 kt total by 2030), capped at ₹900 crore per plant.

3. How Companies Are Selected & Paid

• Two-Stage Bidding: Companies first clear a technical check, then compete in a financial bid where the company asking for the lowest subsidy (least-cost method) wins.
• 3-Stage Payout: Plants must start within 3 years (subsidy reduces if delayed up to 5 years). Money is paid in 3 steps: 25% on initial investment, 50% midway, and 25% once the plant starts working.