PLI, duty incentives soon for Lithium, Nickel processing units in India

The Ministry of Mines is close to finalising a scheme offering Production-Linked Incentives (PLI) and import duty waivers on capital goods for establishing l...

What Happened

The Ministry of Mines is close to finalising a scheme offering Production-Linked Incentives (PLI) and import duty waivers on capital goods for establishing lithium and nickel processing facilities in India.
The scheme carries an outlay of approximately Rs 3,000 crore and proposes a 15% capital subsidy for eligible projects commencing on or after April 1, 2026.
Incentive limits are proposed at 40% of net sales turnover annually for lithium processing units and 25% for nickel processing units, for up to five years.
The scheme initially targets two projects each for lithium processing and nickel processing to meet domestic demand by the end of the decade.
The initiative directly addresses India's dependence on China for critical mineral processing, a vulnerability exposed by EV supply chain reviews.

Static Topic Bridges

Critical Minerals and India's Strategic Dependence

Critical minerals are raw materials essential for clean energy technologies, defence, electronics, and advanced manufacturing, but whose supply is geographically concentrated or supply chains are vulnerable to disruption. India's 2023 Critical Minerals List (published by the Ministry of Mines) identifies 30 critical minerals including lithium, nickel, cobalt, graphite, and rare earth elements. China dominates global processing of many of these minerals — processing over 60% of global lithium and around 70% of global cobalt — creating strategic supply chain risks for countries pursuing energy transitions.

India's Critical Minerals List (2023): 30 minerals identified, including lithium, nickel, cobalt, titanium, graphite, rare earths.
Lithium is essential for lithium-ion batteries used in EVs, grid storage, and consumer electronics.
Nickel is used in high-energy-density battery chemistries (NMC — Nickel Manganese Cobalt) and in stainless steel.
India currently imports nearly all its processed lithium and nickel requirements, predominantly from China.
The Mines and Minerals (Development and Regulation) Amendment Act, 2023 added critical minerals to the list of atomic minerals, enabling the central government to auction these blocks.

Connection to this news: The proposed PLI and duty incentive scheme directly addresses the processing gap — India may acquire raw lithium (via overseas mining acquisitions) but lacks domestic refining capacity to convert ore into battery-grade material.

Production-Linked Incentive (PLI) Schemes

PLI schemes were introduced by the central government in 2020 to boost domestic manufacturing in strategic sectors by offering financial incentives (as a percentage of incremental sales over a base year) to eligible manufacturers. PLI schemes have been extended to 14 sectors including mobile phones, semiconductors, solar PV modules, advanced chemistry cell (ACC) batteries, specialty steel, and automobiles. The critical minerals processing PLI follows the same policy architecture but focuses on upstream material processing rather than end-product manufacturing.

PLI for Advanced Chemistry Cell (ACC) Batteries: Rs 18,100 crore outlay, targets 50 GWh domestic battery manufacturing capacity.
PLI for Solar PV Modules: Rs 24,000 crore outlay, targeting 65 GW capacity.
The National Critical Minerals Mission (announced Budget 2025-26): Rs 34,300 crore outlay over seven years for domestic exploration, overseas acquisition, and processing.
Import duty waiver on capital goods for processing units reduces the initial investment barrier for setting up greenfield facilities.

Connection to this news: The lithium-nickel processing PLI is a downstream complement to the National Critical Minerals Mission's upstream (mining/acquisition) focus — together they aim to create an end-to-end domestic critical minerals value chain.

India's EV Mission and Battery Supply Chain

India's EV targets (30% EV penetration for cars, 80% for two-wheelers by 2030 under the FAME framework and subsequent policies) create massive future demand for lithium-ion batteries. Without domestic processing of lithium and nickel, India's EV supply chain remains exposed to global price shocks and geopolitical supply disruptions. The government's PM E-DRIVE scheme (2024) and the Production-Linked Incentive for ACC batteries are upstream interventions; domestic mineral processing is the missing link.

FAME II (Faster Adoption and Manufacturing of Electric Vehicles): Rs 10,000 crore scheme, 2019-2024; focused on demand incentives.
PM E-DRIVE Scheme (2024): Rs 10,900 crore for charging infrastructure and demand incentives.
India's current EV penetration: approximately 4% for cars, 6% for two-wheelers (as of 2025-26).
Lithium Triangle (Chile, Argentina, Bolivia) holds ~58% of global lithium reserves; Australia and Chile are top producers.
India's Khanij Bidesh India Ltd (KABIL) has signed agreements with Argentina and Australia for lithium block acquisitions.

Connection to this news: Without domestic lithium and nickel processing capacity, India cannot translate its overseas mining acquisitions or imported ore into battery-grade materials at scale — this scheme is designed to close that gap.

Key Facts & Data

Proposed scheme outlay: Rs 3,000 crore (Ministry of Mines)
Capital subsidy proposed: 15% for eligible investments starting April 1, 2026
Incentive duration: up to 5 years
Annual incentive cap: 40% of net sales turnover (lithium processing); 25% of net sales turnover (nickel processing)
Initial project targets: 2 lithium processing projects + 2 nickel processing projects
India's Critical Minerals List: 30 minerals (Ministry of Mines, 2023)
National Critical Minerals Mission outlay: Rs 34,300 crore over 7 years [Unverified: exact figure; announced Budget 2025-26]
PLI for ACC Batteries outlay: Rs 18,100 crore, targeting 50 GWh capacity
India EV targets: 30% car penetration, 80% two-wheeler penetration by 2030
KABIL: India's critical minerals overseas acquisition vehicle, set up by NALCO, HCL, and MECL
China's share of global lithium processing: over 60%; cobalt processing: approximately 70%