India is preparing to roll out a long-awaited incentive scheme for the domestic processing of lithium and nickel — two minerals at the heart of electric vehicle battery manufacturing. The Union Ministry of Mines is expected to shortly notify a policy with an outlay of around 3,000 crore rupees, or about 313 million US dollars, according to two sources familiar with the matter who were not authorised to speak publicly.

The scheme is intended to address a stark structural gap in India's clean energy and electric mobility ambitions: while the country has set aggressive targets for EV adoption and battery manufacturing, it has almost no large-scale refining capacity for the critical inputs that batteries require, leaving it dependent on imports — overwhelmingly from China — for battery-grade refined materials.

The mechanism

According to details that have emerged in stages over the past several months, the proposed scheme is built around a capital subsidy of up to 15 per cent on eligible investments in lithium and nickel processing projects starting on or after 1 April 2026. The incentives would be available for a period of five years.

The subsidy would be subject to project-specific annual caps linked to net sales turnover — set at 40 per cent of annual net sales turnover for lithium processing plants and at 25 per cent for nickel processing plants. Subsidy disbursal would be staged, and linked to minimum plant utilisation thresholds determined by the government.

To qualify, lithium processing facilities must have a minimum annual capacity of 30,000 metric tonnes; nickel processing plants must process at least 50,000 metric tonnes a year. Initial roll-out is expected to support two lithium projects and two nickel projects.

Why processing — not just mining

The policy targets a specific segment of the critical mineral value chain: refining and processing, rather than mining. The distinction matters. Even where India has identified deposits — including the lithium reserves discovered in Jammu and Kashmir in recent years — the refined, battery-grade material required to make cathode and anode materials needs separate, capital-intensive processing infrastructure.

Globally, this processing capacity is heavily concentrated in China. Analysts have repeatedly identified this concentration as a strategic and supply-chain vulnerability for any country with electric vehicle ambitions but limited domestic refining capability. The new scheme is an attempt to address that gap directly.

The EV demand backdrop

The scale of India's EV ambition explains the urgency. New Delhi has set targets of 30 per cent electric vehicle penetration for passenger cars and 80 per cent for two-wheelers by 2030 — up from current shares of around 6 per cent and 9 per cent respectively. Achieving those targets implies a multifold expansion in battery manufacturing capacity within the country over the rest of the decade.

Several large investments are already in motion. Exide Industries is in the process of expanding a 6 GWh battery cell gigafactory. Himadri Speciality has announced plans for a lithium iron phosphate cathode-material plant in Odisha. Multiple Indian and foreign companies have participated in the government's auctions of newly identified critical mineral blocks. The processing-incentive scheme is intended to ensure that these manufacturing investments have a secure domestic source of refined inputs, rather than relying on imported processed material.

Part of a broader policy stack

The lithium-nickel incentive is the latest in a series of policy moves directed at India's critical mineral supply chain. In September 2025, the Union Cabinet approved a separate critical mineral recycling scheme with an outlay of 1,500 crore rupees, aimed at building domestic capacity for separating and producing critical minerals from secondary sources such as e-waste and used lithium-ion batteries. The recycling scheme has a six-year tenure.

In April 2026, the Mines Secretary publicly confirmed that the government had shortlisted two critical minerals linked to securing an electric vehicle value chain for a processing policy, without specifying further at the time. The Reuters report on which the latest details rest is consistent with that announcement.

Together, the processing incentives, the recycling scheme, the auction of critical mineral blocks, and ongoing exploration efforts form the components of what the government has framed as the National Critical Mineral Mission.

What it could unlock

If executed at announced scale, the scheme could trigger meaningful private investment in domestic refining capacity. Industry participants have been waiting for clearer policy signalling before committing the substantial capital that processing plants require. The combination of a defined 15 per cent capital subsidy, a 5-year subsidy window, and visibility on minimum-scale requirements gives investors a clearer planning horizon.

For India's longer-term clean energy and net-zero objectives — which include a target of 500 gigawatts of non-fossil-fuel power capacity by 2030 and a net-zero emissions target by 2070 — domestic processing capability is not optional. Battery storage at grid scale, in addition to EVs, depends on the same processed inputs.

The road ahead

The immediate trigger to watch is the formal notification of the scheme by the Ministry of Mines, which is expected shortly. Implementation will then depend on whether the initial four projects — two lithium, two nickel — attract serious capital, and whether the staged subsidy disbursal mechanism, linked to plant utilisation, is calibrated in a way industry finds workable.

Beyond the headline outlay, the deeper question is whether the scheme catalyses an actual processing ecosystem in India — one that, by the end of the decade, can supply a meaningful share of the country's lithium-ion battery requirements from domestic sources rather than from imported refined material. That answer will become visible only over the coming several years.