NEW DELHI - India is considering offering incentives to encourage private companies to set up lithium processing facilities, as New Delhi tries to develop its nascent lithium mining and boost supplies of the EV battery metal, three government sources said.

It would offer incentives to companies to set up lithium processing plants under a new critical minerals policy that was being worked out by the mines ministry, the sources said.

"The critical minerals policy will be comprehensive and will cover all aspects from exploration to mining to value addition," one of the sources said.

"It will also cover incentives for beneficiation and refining within the country," the source said.

The sources, however, said it was a little early to know the exact form of incentives the government would offer, but New Delhi would try to take a cue from countries such as Australia and Canada.

Responding to Reuters queries, the Ministry of Mines said the government was taking various steps to ensure the availability of critical minerals for the downstream industry. It did not elaborate.

The government could offer subsidies and tax benefits to encourage investment in lithium processing, said Karthik Bansal, research analyst at the New Delhi-based Centre for Social and Economic Progress.

Last year, India, the world's third-biggest carbon emitter, listed 30 minerals, including lithium, as "critical" to meet the country's ambition for cleaner technologies in sectors such as electronics, telecommunications, transport and defence.

It found its first lithium reserves only last year and industry experts say the country needs to set up facilities to process lithium locally.

Companies including SoftBank-backed e-scooter maker Ola Electric, and miner Vedanta and Jindal Power are among those bidding for critical minerals blocks, which include lithium, with a shortlist expected by July.

Winners will receive licences to explore and mine lithium, and will also be responsible for processing it into lithium concentrates or lithium chemicals for the battery industry.