(Correction of typographical errors in first and last paragraphs)
Neha Arora
NEW DELHI, Jan 29 (Reuters) – India plans to soon provide incentives for companies to set up lithium and nickel processing plants to help boost production and meet growing demand for the key mineral, two sources and a government report reviewed by Reuters said.
India is seeking to accelerate its energy transition and reduce emissions by promoting clean energy initiatives such as electric vehicles, even though the country lacks the technology to process key minerals, a capability largely dominated by China.
Nickel and lithium are critical to India’s electric vehicle supply chain, especially when it comes to batteries, as New Delhi targets 30% electric vehicle penetration by 2030 and 80% two-wheeler penetration from the current 4% and 6%.
According to reports, the incentive plan proposes a 15% capital subsidy for investments in eligible lithium and nickel processing projects starting on or after April 1, 2026, subject to a cap.
One source said a 15% capital allowance appeared to be “realistic”.
India’s mines ministry, which is responsible for the proposal, did not respond to an email from Reuters seeking comment.
Under the plan, incentives will be valid for five years, with incentives capped at 40% of annual net sales for lithium processing plants and 25% of annual net sales for nickel plants, the presentation showed.
To qualify for incentives, lithium processing plants must have a capacity of at least 30,000 tonnes, while nickel plants must have a capacity of at least 50,000 tonnes, the report shows.
Subsidies will be released in phases based on minimum factory utilization targets set by the government, the presentation showed.
The government initially planned to roll out incentives for two lithium projects and two nickel projects to meet the country’s needs until 2030, a source and presentation said.
In 2023, India identified more than 20 minerals, including lithium, as “critical” to its energy transition efforts and to meet growing corporate needs.
Reuters previously reported that India has approached multiple countries to seek technical cooperation in lithium processing.
(Reporting by Neha Arora; Editing by Mayank Bhardwaj and Thomas Derpinghaus)
