- Why in news
- The Union Cabinet approved the CAPEX Support Scheme to Promote Critical Mineral Processing on 4 November 2026, with an outlay of ₹2,814 crore. PIB issued a backgrounder on it on 5 November 2026.
- What it is
- This is a central scheme that gives a capital subsidy to firms building domestic plants that refine lithium and nickel into high-purity products. It targets India's heavy import dependence on refined critical minerals. Beneficiaries are picked by competitive bidding and paid against project milestones.
- Subsidy and plants
- 30% of eligible investment is given as subsidy for four plants: two lithium (at least 30 kt each) and two nickel (at least 50 kt each).
- Caps per beneficiary
- Support is capped at ₹500 crore per lithium beneficiary and ₹900 crore per nickel beneficiary.
- Selection
- Two stages: technical qualification, then financial bidding on the least-cost criterion, i.e. the lowest CAPEX support sought.
- Governance
- The apex Governing Council is chaired by the Secretary, Ministry of Mines. It makes the final selection of beneficiaries. A Techno-Financial Committee evaluates applications and a Project Management Agency supports implementation.
- Commissioning timeline
- The plant must be commissioned within three years of the Letter of Award, and in any case within five years. Delay beyond three years triggers tapering of the remaining support.
- Support rate
- Capital subsidy is 30% of eligible investment for four plants: two lithium and two nickel.
- Caps
- Support is capped at Rs 500 crore per lithium beneficiary and Rs 900 crore per nickel beneficiary.
- Disbursal and cobalt
- Incentives are paid in three milestone-linked tranches. Cobalt is expected as a by-product of nickel production.
Don’t confuse with CAPEX scheme vs NCMM recycling scheme: The CAPEX scheme (₹2,814 crore) subsidises lithium and nickel processing plants. The ₹1,500 crore recycling scheme, approved on 3 September 2025 under NCMM, promotes recovery of critical minerals from e-waste and spent batteries.
Don’t confuse with Lithium plants vs nickel plants: Lithium: at least 30 kt, cap ₹500 crore. Nickel: at least 50 kt, cap ₹900 crore.
Schemes: 52 Prelims questions since 2013, 10 in Prelims 2026 alone. They test features, the period and who funds it. In Mains, 33 news-triggered questions, mostly GS3.
Why it matters
- Cuts import dependence on refined lithium and nickel, improving supply security against geographically concentrated processing.
- Fills the missing processing link between mining and battery or speciality steel manufacturing, supporting clean energy and net-zero 2070 goals.
- Expected to bring about ₹10,000 crore of investment and jobs, and to save foreign exchange.
- Cuts import dependence on refined lithium, nickel and cobalt.
- Supports EVs, battery storage, electronics, defence and speciality steel value chains.
- Improves supply chain resilience and economic security against concentrated global processing.
Problems
- Processing is not viable now: high capital costs, advanced technology needs and strict environmental safeguards.
- Limited access to raw materials and suitable technologies; lithium plants exclude brines, so feedstock must be sourced.
- Only four plants are supported, so capacity may fall short of demand unless more private investment follows.
- High capital cost and limited availability of suitable technology.
- Constrained access to raw materials, as ores are largely imported.
- Only four plants are supported, so scale is small against demand.
Way forward
- Secure long-term raw material access through overseas assets, block auctions and recycling.
- Link the scheme with downstream battery and steel schemes and build technology partnerships and R&D.
- Enforce milestone-linked disbursement and environmental norms, and review capacity needs for scale-up.
- Secure overseas and domestic raw material supply through mineral diplomacy and auctions.
- Support processing technology through R&D and partnerships.
- Link the scheme with recycling and battery manufacturing incentives.
Put in your answer
Critical minerals list: India has identified 24 critical minerals, including lithium, nickel, cobalt, graphite and rare earths.
Mineral block auctions: 64 critical and strategic mineral blocks and 11 Exploration Licence blocks have been auctioned so far.
Import dependence: India depends substantially on imports for refined intermediates and high-purity materials.
- 2025Mains GS3 · Q12Discuss rationale, achievements and improvement of the Production Linked Incentive scheme.
- 2025Mains GS3 · Q16Challenges facing semiconductor industry in India and features of India Semiconductor Mission.
- 2026Prelims Q95Which statements on rare earth elements and critical minerals, including NCMM 2025, are correct?
- 2025Prelims Q6Which statements on India's critical minerals, Minerals Security Partnership and 2023 MMDR amendment are correct?
- 2025Prelims Q43Which of cobalt, graphite, lithium and nickel are key EV battery elements?
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Single answer
Ours, not from a UPSC paper
Consider the following statements about the CAPEX Support Scheme to Promote Critical Mineral Processing, approved by the Union Cabinet in November 2026:
Which one of the following statements is correct?
True or false?
1 of 13
Statements the way Prelims prints them. Say first, then see the fact.
1.The scheme offers a capital subsidy of 30% of eligible investment for setting up critical mineral processing plants.
True. The subsidy is 30% of eligible investment.
2.The scheme supports processing plants for lithium, nickel and cobalt, with two beneficiaries selected for each of the three minerals.
False. Only lithium and nickel plants are supported, two each, four in total. Cobalt is only recovered at nickel plants.
3.Beneficiaries are selected on the least-cost criterion, that is, the lowest CAPEX support sought, after a technical qualification stage.
True. Stage 2 financial bidding picks the lowest CAPEX support sought.
4.The Governing Council of the scheme is chaired by the Union Minister of Mines.
False. It is chaired by the Secretary, Ministry of Mines. Guideline amendments need the Union Minister's approval.
5.The lithium plants supported under the scheme will process ores and concentrates, excluding brines, into battery-grade products.
True. Brines are excluded from the lithium plants' feedstock.
6.Incentives are released in two tranches, with the final release after the plant is commissioned.
False. Incentives are released in three tranches, at 25%, 50% and 100% cumulative.
7.The scheme is funded partly by budgetary support and partly by a levy on mineral royalties.
False. It is fully funded through budgetary support from the Government of India.
8.The National Critical Mineral Mission was launched in January 2025.
True. NCMM was launched in January 2025.
9.The scheme provides a capital subsidy of 50% of eligible investment.
False. The subsidy is 30% of eligible investment.
10.The scheme supports two lithium and two nickel processing plants.
True. Four plants: two lithium, two nickel.
11.The maximum support per lithium beneficiary is Rs 900 crore and per nickel beneficiary Rs 500 crore.
False. Lithium is capped at Rs 500 crore and nickel at Rs 900 crore.
12.Beneficiaries are chosen by the lowest capex support sought by bidders after a technical qualification stage.
True. Two-stage selection with least-cost criterion.
13.The incentive is paid as a single lump sum on commissioning of the plant.
False. It is disbursed in three tranches linked to milestones.
Written by us from the release, not by UPSC; checked by a second model.
Mains practice
15 marks · 250 words
The Union Cabinet has approved a ₹2,814 crore CAPEX Support Scheme to promote the domestic processing of lithium and nickel. Discuss the provisions of the scheme and examine how far it can reduce India's import dependence on refined critical minerals, along with the challenges in its implementation.
Worth revising until Prelims 2028: most news questions come within two years of the event.