Cabinet Backs Lithium and Nickel Processing Plants and Grid-Scale Energy Storage: What the Two Schemes Mean
The Union Cabinet met on 4 November 2026 to take up two schemes: capital support for critical mineral processing and Viability Gap Funding (VGF) for grid-scale energy storage.
As reported after the meeting, the processing scheme has an outlay of about ₹2,814 crore. It gives a capital subsidy of 30% of eligible investment for four plants: two lithium processing plants (at least 30 kilotonnes a year each) and two nickel processing plants (at least 50 kilotonnes a year each). Firms asking for the lowest support will be chosen (a "least-cost" selection).
The storage scheme gives about ₹14,500 crore of VGF for 92 GWh of storage: 60 GWh of pumped storage, 30 GWh of battery energy storage (BESS) and 2 GWh of newer technologies. Both schemes run from FY 2026-27 to FY 2030-31.
Battery projects must use at least 40% domestic content (parts made in India), and projects are to be awarded through tariff-based competitive bidding (whoever offers the lowest price for the service wins).
The need is clear from recent data: about 1,835 million units of renewable power were curtailed (wasted because the grid could not take it) in July and August 2026, of which 1,462 million units were solar and 373 million units were wind.
Lithium and nickel were picked because they are key to electric vehicle batteries. The Ministry of Heavy Industries is separately running a PLI scheme for 50 GWh of advanced chemistry cell (ACC) battery manufacturing, of which 10 GWh is meant for grid storage.
National Critical Mineral Mission (NCMM): India's Plan to Secure Minerals of the Future
The National Critical Mineral Mission is the Government of India's seven-year programme to make the country self-reliant in critical minerals. These are minerals like lithium, cobalt, nickel, graphite and rare earths. They are vital for electric vehicles, solar panels, electronics and defence, but India has very little of them and their supply is controlled by a few countries.
India has started finding and auctioning critical mineral blocks, but most of the world's processing happens in China. Without processing plants, even mined ore has to be sent abroad. The new capital subsidy for lithium and nickel plants is a direct step under the NCMM's goal of building the full value chain at home.
Viability Gap Funding (VGF): How the Government Makes Infrastructure Projects Bankable
Viability Gap Funding is a one-time grant that the government gives to a project that is useful for society but does not earn enough money to attract private investors on its own. The "gap" is the difference between what the project costs and what it can earn. The government fills a part of this gap, usually during construction, so that private companies are willing to build and run the project.
Storage is costly, and power companies cannot yet recover that cost from tariffs alone. The new ₹14,500 crore VGF for 92 GWh of storage uses the same idea: a one-time public grant that brings down the cost so the projects become bankable and the final price of stored power stays low.
Battery Energy Storage Systems (BESS)
A Battery Energy Storage System is a large set of rechargeable batteries connected to the power grid. It soaks up electricity when there is more supply than demand (for example, at sunny noon) and gives it back when demand is high (for example, in the evening). This lets the grid use solar and wind power even when the sun is not shining or the wind is not blowing.
The two Cabinet schemes are linked. The VGF creates steady demand for grid batteries, and the processing subsidy helps make the lithium and nickel those batteries need inside India. Together they push both ends of the battery value chain at the same time.
- Critical mineral processing scheme: about ₹2,814 crore; 30% capital subsidy; 4 plants (2 lithium of at least 30 kt each, 2 nickel of at least 50 kt each); least-cost selection
- Grid-scale storage VGF: about ₹14,500 crore for 92 GWh (60 GWh pumped storage, 30 GWh BESS, 2 GWh other technologies); expected investment about ₹97,600 crore
- Both schemes: FY 2026-27 to FY 2030-31
- BESS domestic content requirement: at least 40%; awarded by tariff-based competitive bidding
- Renewable power curtailed in July to August 2026: about 1,835 million units (1,462 MU solar, 373 MU wind)
- PLI for ACC batteries: 50 GWh of capacity, of which 10 GWh for grid-scale storage
- NCMM: approved 29 January 2025; ₹16,300 crore government outlay plus ₹18,000 crore PSU investment; seven years
- DEA VGF scheme: since 2006; 20% + 20% for economic infrastructure; 30% + 30% for social infrastructure since 2020