India Launches Rs 2,814 Cr Plan to Build Lithium and Nickel Refineries

The Union cabinet has cleared a major financial plan aimed at boosting domestic production of critical battery components, directly addressing India mineral resources needs as part of a global race for the middle of the supply chain. Approved on November 4, the Rs 2,814 crore Capex Support Scheme will fund four large-scale refineries, including the country's first commercial-scale lithium facilities, covering two lithium units and two nickel units.

Simultaneously, the cabinet greenlit Rs 14,500 crore in viability gap funding for grid-scale energy storage with strict domestic content requirements. The Union ministry of mines followed up by easing regulations for critical mineral block auctions, lowering the required number of technically qualified bidders from three to two. These synchronized measures seek to balance domestic supply generation with guaranteed market demand.

Under the refinery scheme, the government will cover 30 per cent of capital costs for the plants, capped at Rs 500 crore for lithium units and Rs 900 crore for nickel units. The lowest-bidding developers will secure the subsidies, with the objective of generating 60,000 tonnes of lithium and 100,000 tonnes of nickel capacity annually by 2030. Prime Minister Narendra Modi noted on social media that the decision strengthens domestic value addition and future technology capabilities.

India is investing Rs 2,814 crore in new refineries to build domestic battery material processing capabilities.

Despite these policy steps, industry analysts point to significant hurdles, including high capital requirements, restricted raw material access, and limited technological know-how. China currently controls roughly 65 per cent of global lithium refining capacity and has recently implemented export controls on key extraction and cathode technologies. Meanwhile, other nations like the United States, the European Union, Indonesia, and Zimbabwe are aggressively pursuing domestic smelting and processing controls.

India remains entirely dependent on imports for critical minerals, importing 18,200 tonnes of lithium compounds in 2025 alone, predominantly from China. While existing firms like Altmin and Lohum prepare for lithium processing and Vedanta produces small-scale nickel sulphate, the country faces critical tests regarding ore acquisition, conversion costs, and matching domestic refining capacity with local cell manufacturing buyers.

Why it matters

This funding initiative represents India's first dedicated push to establish the middle tier of the battery supply chain, transforming how raw minerals transition into high-purity chemicals. For regional stakeholders, domestic manufacturers, and energy consumers in India, reducing reliance on foreign chemical imports will dictate the pace and cost of the nation's electric vehicle and energy storage transition.