Why in the News
India, almost wholly import-dependent for lithium and nickel, is moving from relying on imported processed minerals to paying industry to build processing plants at home. The Union Cabinet has approved a Rs 2,814 crore scheme of capital expenditure support for this, as China’s grip on global processing leaves India exposed.
What is critical mineral processing, and why is India exposed?
- Critical mineral processing: Processing turns mined ore into the refined metals and compounds that factories use, such as battery-grade lithium. It works like a refinery that turns crude oil into petrol.
- Import dependence: India has little processing capacity and is almost 100% import-dependent for cobalt, lithium, nickel, rare earth elements (REEs) and silicon.
- China’s leverage: China controls 90% of global critical mineral processing. It often uses that hold as leverage during trade tensions.
- The takeaway: Without its own processing plants, India stays vulnerable to supply disruptions in minerals that its batteries, electronics and defence industries need.
How will the scheme work?
- Lithium and nickel focus: The scheme aims to build a complete processing ecosystem for lithium and nickel in India.
- Capital subsidy: The government pays a 30% capital subsidy on eligible investment, meaning it bears part of the cost of building each plant.
- Four plants: The support covers four plants, and what each beneficiary can receive is capped:
| Component (lifecycle stage) | Plants and minimum capacity | Maximum support per beneficiary |
|—|—|—|
| Lithium processing (plant build) | Two plants, at least 30 kilotonnes (kt) each | Rs 500 crore |
| Nickel processing (plant build) | Two plants, at least 50 kt each | Rs 900 crore | - Sectors served: The output will supply electric mobility, electronics, defence, speciality steel and battery energy storage systems (BESS), which store electricity for later use.
Where will the processing parks come up?
- One mineral per park: The government has identified four States, and each park is planned as a complete ecosystem for one mineral.
- Gujarat, rare earths: Gujarat has heavy rare earth elements and existing beneficiation (upgrading ore by removing waste rock) and processing capability.
- Andhra Pradesh, rare earth corridor: Andhra Pradesh has been identified for a rare earth corridor.
- Odisha, nickel: Odisha has domestic nickel reserves, and its eastern location suits processing nickel imported from Indonesia and other countries with large reserves.
- Maharashtra, lithium: Maharashtra is set to focus on lithium processing.
What wider effort does the scheme belong to?
- Reducing dependence on China: The scheme is part of wider government efforts to build domestic processing and cut reliance on China.
- Stockpiling policy: The government is also working on a policy to stockpile critical minerals, meaning a strategic reserve that keeps supply going through disruptions.
- National Critical Mineral Stockpile Programme: The National Critical Mineral Mission (NCMM) proposes this programme for critical and strategic minerals, with Rs 500 crore committed over the mission period.
Challenges
- Imported ore: Much of the ore to be processed must still be imported, so plants remain exposed to supply shocks. Eg. Odisha’s nickel from Indonesia.
- Scale gap: Four plants are a small start against China’s dominance of global processing.
- Partial support: The subsidy covers only a share of eligible investment and is capped per beneficiary, so investors still carry most of the cost.
- Processing know-how: Refining these minerals at scale needs technology and skills India is only beginning to build.
Way Forward
- Secure ore abroad: Khanij Bidesh India Limited (KABIL) should expand overseas lithium and nickel sources, building on its lithium acreage in Argentina.
- Finalise the stockpile: The government should finalise the stockpiling policy so reserves cover disruptions until the plants are built.
- Assured buyers: Each State park should be linked to buyers in electric mobility, battery storage and electronics so plant output has assured demand.
Conclusion
The scheme shifts India from relying on imported processed minerals toward building its own capacity, but four plants address only part of that exposure. Whether the plants reach production with secure ore supply, and whether the stockpiling policy is finalised, are the markers to watch.
Back2Basics: National Critical Mineral Mission (NCMM)
- What it is: A mission launched by the Government of India in 2025 to build self-reliance in the critical mineral sector.
- Mission period: It runs from 2024-25 to 2030-31.
- Exploration target: It aims at 1,200 domestic exploration projects by 2030-31.
Matching Previous Year Question
“[2026] Which of the following statements about Rare Earth Elements (REEs) and Critical Minerals is/are correct? 1. Modern technological innovations including Artificial Intelligence, robotics and space exploration extensively utilise Rare Earth Elements (REEs). 2. China has the highest share in mining of REEs followed by India. 3. The Government of India launched the National Critical Mineral Mission (NCMM) in 2025 to establish a robust framework for self-reliance in the critical mineral sector. 4. Rare Earth Elements are a set of 13 metallic elements. Select the answer using the code given below: (a) 1 and 3 only (b) 3 only (c) 1, 3 and 4 (d) 1, 2 and 4 ANSWER: A”
