India: government to incentivise lithium and nickel processing

The Indian government will shortly introduce incentives for domestic lithium and nickel processing, a move aimed at addressing rising demand for these critical minerals. The step is also expected to help the country improve supply chain stability.

Flagge flag india inden unsplash naveed ahmed — Image: Unsplash/Naveed Ahmed

Based on information outlined in a government presentation, a report from Reuters says India’s Ministry of Mines plans to offer a 15 per cent subsidy on eligible capital expenditure, subject to a cap, for lithium and nickel processing projects. The ministry could introduce the subsidy as early as 1 April 2026.

A person familiar with the matter called the proposed 15 per cent capital subsidy ‘realistic,’ indicating it is likely to move forward. Should the Ministry of Mines introduce the subsidy programme as planned, it would provide incentives for up to five years, subject to annual limits of 40 per cent of net sales turnover for lithium processing facilities and 25 per cent for nickel facilities.

The Ministry of Mines would offer the incentive scheme to companies setting up plants that can process at least 30,000 metric tonnes of lithium or 50,000 metric tonnes of nickel per year. The ministry would set minimum plant utilisation targets and disburse the subsidy in stages once companies meet them.

Initially, the Ministry of Mines plans to offer incentives for two projects each for lithium and nickel processing in order to meet the country’s demand by the end of the decade. These critical minerals are central to the supply chain of India’s electric vehicle (EV) industry, particularly for batteries. The government aims to raise the share of electric models in car sales from 4 per cent to 30 per cent by 2030, and in two-wheeler sales from 6 per cent to 80 per cent.

The proposed incentive scheme to promote the localisation of lithium and nickel processing would help India reduce its reliance on imports. At present, the country lacks the technology required to process many critical minerals and is largely dependent on imports.

In a related move, India is also seeking greater independence in lithium-ion cell manufacturing. The country currently exempts capital goods used to make lithium-ion cells for batteries from basic customs duties. In its FY2026 budget announced on 1 February, the government proposed extending the exemption to capital goods used to make lithium-ion cells for battery energy storage systems.

reuters.com, indiabudget.gov.in (p. 27)