India is preparing to offer incentives to companies establishing lithium and nickel processing plants. The move aims to boost domestic output and meet the growing demand for critical minerals. This initiative is part of India's broader strategy to accelerate its energy transition, particularly by promoting electric vehicles and reducing emissions. Currently, China dominates the processing of these essential minerals.

New Delhi is targeting 30% electric car penetration and 80% for two-wheelers by 2030, which relies heavily on batteries and the supply chain for these metals. The plan includes a 15% capital subsidy for eligible investments, starting April 1, 2026. Incentives will be available for five years, capped at 40% of annual net sales for lithium and 25% for nickel plants.

To qualify, lithium plants must have a minimum capacity of 30,000 metric tons, while nickel plants need at least 50,000 tons. The government plans to initially roll out incentives for two lithium and two nickel projects. This is a crucial step towards self-reliance in the EV sector, reducing dependence on imports.

Previously, India identified over 20 minerals, including lithium, as critical for its energy transition. This move signals a strong commitment to establishing a robust domestic supply chain. Investors should watch for further details on specific project approvals and timelines. The Ministry of Mines has yet to comment on the plan.