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Incentives for Processing and Refining Critical Li-ion Battery Minerals


Recently, the think tank of the Government of India - Niti Aayog, released a report about the supply chain of critical minerals required for the manufacturing of Lithium Ion Batteries. The country's shift to environment-friendly fuel sources has boosted the demand for lithium-ion batteries. To fulfil this increased demand, Niti Aayog has suggested some measures which can be taken to boost the production of critical battery minerals through the processing and refining plants which will help the manufacturing of Lithium Ion Batteries in our country and minimise the dependency on imports. The move is also inspired by a determination to reach the 2030 target of reducing emissions by forty-five per cent from the 2005 levels.

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Need of Critical Minerals for Lithium Ion Batteries

The Niti Aayog has analysed the requirement of Battery production to fulfil the ongoing demand. The results showed that the country will require 100 GWh power from the batteries which will cost 193 thousand tonnes of raw material per annum. This triggered the need to process and refine raw materials required for the Lithium-ion Battery manufacturing industry. These raw materials majorly include Lithium (Li), Nickel (Ni), Cobalt (Co), and Graphite. Niti Aayog has recommended providing incentives for processing and refining critical li-ion battery minerals and assisting to maintain an efficient supply chain for the same.

India has set a carbon emission reduction target for 2030. It has to reduce its carbon emission of gross domestic product to forty-five per cent from the 2005 levels. To minimise these emissions, the li-ion batteries play a crucial role. Industries have to shift to new renewable energy sources to achieve the set 2030 target. This goal can be achieved by producing more and more li-ion batteries domestically for which enough resources will be required. The present Niti Aayog report focuses on mitigating the lack of critical battery minerals and ways to ensure a strong supply chain of these crucial minerals to ensure continuous battery production in the country.

Incentives for Processing and Refining Critical Li-ion Battery Minerals

The Niti Aayog recommended the implementation of various tax benefits for the entrepreneurs establishing units for the processing and refining of raw materials used in Lithium Ion Batteries. These financial benefits are as follows-

Production Linked Incentives for Processing and Refining Critical Li-ion Battery Minerals

Often referred to as PLIs, these Production Linked Incentives will provide financial assistance to businesses for setting up refining and processing facilities that will help to boost the production of Lithium Ion Batteries by ensuring a healthy supply chain.

Tax Benefits for Processing and Refining Critical Li-ion Battery Minerals

The entrepreneurs in this processing and refining business will also get tax benefits for their capital investment. The tax benefits of the research and development expenses will open doors for research without restrictions which will result in better technologies and efficient production.

Other Policies to Boost Lithium Ion Battery Production

Apart from the incentives for Processing and Refining Critical Li-ion Battery Minerals, Niti Aayog recommended the following steps to strengthen the supply chain of raw materials-

  • Domestic Exploration

Exploration exercises must be conducted to find the minerals based on the estimations. The estimated locations to find the minerals like Lithium, Nickel, Cobalt, and Graphite are Jammu and Kashmir, Odisha, Jharkhand, Nagaland, and Tamilnadu. The plan is to process and refine these critical minerals from these locations and supply them to the manufacturing plants.

  • Overseas Exploration

Apart from domestic explorations, the government can also initiate joint exploration operations in friendly countries like Australia, Chile, Bolivia, and Argentina to ensure the supply of critical battery minerals.

  • Finding Alternatives

Various government and private agencies are working to discover earth-abundant alternatives to critical battery minerals. ISRO, Department of Atomic Energy and CECRI are working on batteries based on graphite, fabricated sodium and cheaper iron minerals.

  • Development of Extraction Technologies

Research and development can be undertaken to innovate recycling technologies to extract critical battery minerals from used lithium-ion batteries. This technique will support the principles of sustainable development and provide cheaper raw materials for the production of new lithium-ion batteries.

  • Royalty Collection

The policy think tank of the Government of India, Neeti Aayog also suggested the implementation of royalties on the production of critical minerals used for Lithium Ion Battery Production. The government will redirect these funds to undertake innovations in battery technology.

Benefits of the Niti Aayog Report on Supply Chain Improvements

The recently published report of the Niti Aayog suggests various measures to be taken to ensure the breakless operations of Lithium Ion Battery manufacturing businesses. They will benefit the nation and to be more specific, the lithium-ion manufacturing industry in many ways as given below-

  • Rise of Innovative Technologies

The research programs for the discovery of alternative technology to produce batteries will support innovation and provide opportunities for youngsters to learn and excel in the field of battery technology.

  • Support of Sustainable Development Practices

The report also recommends research and development to discover recycling technologies to extract critical battery materials from lithium-ion batteries. It supports the idea of sustainable development and ensures the raw materials are used in the most efficient manner.

  • Expansion of Recycling Infrastructure

The scheme will lead to the establishment of new processing, refining and recycling plants which will strengthen our recycling infrastructure and create jobs in the sector.

  • Boost to Supply Chain

With various corrective and innovative measures discussed in the report, the supply chain can be cured and seamless availability of critical battery minerals like Li, Ni, Co, and Graphite can be assured for lithium-ion battery manufacturing units.

  • Reduce Reliance on Imports

With this policy implementation, the overall production of li-ion batteries in the country will be boosted. Presently a large chunk of batteries are imported from foreign markets to fulfil the domestic demand. We have to be self-reliant and fulfil domestic demand efficiently to whatever extent possible otherwise it will be hard for us to achieve the carbon emission reduction target.


The incentives for processing and refining critical li-ion battery minerals will encourage new entrepreneurs to explore this opportunity. Tax incentives and other financial assistance will help these plants to survive in their initial stage. In addition to the job creation, these facilities will support the aim to fulfil the demands of our li-ion battery manufacturing industries by processing and refining the materials used for their production. The exploration exercises will also be undertaken which will ensure the supply of lithium, nickel, cobalt and graphite to these newly established processing plants. These plants will prove themselves to be crucial to maintain a healthy supply chain and help the country to reach the goal of reducing carbon emissions by 2030.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.


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Yash Chauhan is a law graduate from the University of Delhi and a skilled content writer at Corpseed. With a keen interest in the legal industry, he specializes in writing articles on contemporary legal developments, corporate compliances,...

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