The Union Cabinet is expected to consider two proposed schemes aimed at strengthening India's critical mineral processing capacity and expanding large-scale energy storage infrastructure. The proposals involve capital expenditure support for setting up critical mineral processing facilities and a viability gap funding (VGF) mechanism for developing grid-scale energy storage systems.
According to a memorandum reviewed by The Hindu, both proposals are scheduled for consideration at the Cabinet meeting on November 4, 2026. The initiatives are intended to address two important requirements for India's industrial and energy sectors: building domestic capacity to process strategically important minerals and improving the ability of the electricity grid to store and manage power.
Proposed Capital Support for Critical Mineral Processing
The first proposal focuses on providing capital expenditure assistance to companies establishing critical mineral processing facilities in India.
Critical minerals are essential inputs for several industries, including electric vehicle manufacturing, renewable energy equipment, electronics, batteries and advanced manufacturing. However, access to raw mineral resources alone is not sufficient. Processing and refining capabilities are also necessary to convert extracted materials into forms suitable for industrial use.
India's efforts to strengthen domestic processing capacity are linked to the broader objective of reducing supply-chain vulnerabilities and improving the availability of important industrial materials.
The Hindu had previously reported that the proposed scheme could offer financial support of around 30% of the project cost for establishing these processing plants. However, this figure should be treated as a reported proposal rather than a confirmed benefit until the government announces the final scheme guidelines.
Viability Gap Funding for Grid-Scale Energy Storage
The second proposal concerns a viability gap funding scheme for the development of grid-scale energy storage systems.
Large-scale energy storage is becoming increasingly important as India expands its renewable energy capacity. Solar and wind power generation can vary depending on weather conditions and the time of day. Energy storage systems can help manage these fluctuations by storing electricity when supply is available and releasing it when demand rises or generation falls.
Grid-scale storage can therefore support electricity supply management, improve grid flexibility and help integrate a larger share of renewable energy into the power system.
Viability gap funding is a financial support mechanism generally used to make infrastructure projects commercially feasible when their expected revenue may not be sufficient to attract investment on its own. Under the proposed scheme, such assistance could help encourage investment in large energy storage projects. The specific funding structure, eligibility conditions and implementation framework will depend on the final government decision.
Why the Two Proposals Matter
The two initiatives address different but connected areas of India's economic development.
Critical mineral processing: Financial support could encourage investment in domestic processing facilities and strengthen industrial supply chains.
Grid-scale storage: VGF support could improve the commercial viability of energy storage projects and support renewable electricity integration.
Private investment: Government assistance may help reduce initial project costs and encourage participation by companies and infrastructure developers.
Long-term energy security: Greater domestic processing capacity and improved electricity storage could contribute to more resilient industrial and energy systems.
For companies considering investments in mineral processing, energy infrastructure or related projects, financial planning and assessment of project viability will be important. Shunyatax's strategic advisory services can support businesses in evaluating investment considerations and broader commercial risks.
Cabinet Decision and Final Scheme Details Awaited
The Union Cabinet was scheduled to meet on November 4, 2026, to consider the two proposals. However, the available report describes them as matters expected to be taken up, not as schemes already approved.
The final position will depend on the Cabinet's decision and subsequent official notifications. Details such as the funding allocation, eligible technologies, project requirements, implementation timelines and application procedures will need to be confirmed through government announcements.
If approved, the proposals could form part of India's broader effort to strengthen critical mineral value chains while developing the infrastructure needed to support a changing electricity system.