Scheme to Promote Critical Mineral Recycling Launched by the Indian Government

The Indian government has approved a Rs 1,500 crore incentive scheme to develop recycling capacity in the country for the separation and production of critical minerals from secondary sources.

This scheme is part of the National Critical Mineral Mission (NCMM), which aims to build domestic capacity and supply chain resilience in critical minerals.

Critical minerals are the building blocks for modern technologies, making them vital for economic growth, sustainable development, and achieving global climate goals.

They are used extensively in high-tech industries and clean energy solutions, including electric vehicles, solar panels, semiconductors, mobile phones, defence, and advanced medical equipment. 

Minerals such as lithium, cobalt, nickel, and rare earth elements are crucial for clean energy technologies, including solar panels, wind turbines, batteries for electric vehicles, and energy storage systems.

However, many of the critical minerals are scarce, have limited global supply, and are concentrated in the extraction/processing of a few countries. The value chain, comprising exploration, auction and mine operationalisation, has a gestation period before it can supply critical minerals to the Indian industry.

A prudent way to ensure sustainability in the near term is through the recycling of secondary sources. By leveraging critical mineral recycling, India can reduce dependence on imports, mitigate supply chain risks and promote a circular economy. 

The scheme launched by the Indian government will have a tenure of six years from FY 2025-26 to FY 2030-31. The eligible feedstock for recycling includes e-waste, used lithium-ion batteries, and other scraps such as catalytic converters on end-of-life vehicles.

Expected beneficiaries will be both large, established recyclers and small, new recyclers (including start-ups), for whom one-third of the scheme’s outlay has been earmarked. The scheme will apply to investments in new units as well as expansion of capacity/modernisation, and diversification of existing units.

The scheme will provide an incentive for the recycling value chain, which is involved in the actual extraction of critical minerals, as opposed to the value chain involved in only black mass production.

The incentives under the critical mineral recycling scheme will comprise a 20% capex subsidy on plant & machinery, equipment and associated utilities for starting production within the specified timeframe, beyond which a reduced subsidy will be applicable; and an opex subsidy, which will be an incentive on incremental sales over the base year (FY 2025-26), viz. 40% of the eligible opex subsidy in the 2nd year and the remaining 60% in the 5th year from FY 2026-27 to FY 2030-31 on achievement of the specified threshold incremental sales.

To ensure a greater number of beneficiaries, the total incentive (capex plus opex subsidy) per entity will be subject to an overall ceiling of Rs 50 crore for large entities and Rs 25 crore for small entities, within which there will be a ceiling for opex subsidy of Rs 10 crore and Rs 5 crore, respectively.

In terms of key outcomes, the critical mineral recycling scheme incentives are expected to develop at least 270 kiloton of annual recycling capacity, resulting in around 40 kiloton of annual critical mineral production, bringing in about Rs. 8,000 crore of investment and creating close to 70,000 direct and indirect jobs.

Several rounds of consultations with industry and other stakeholders were held through dedicated meetings and seminar sessions for formulating the scheme.

By tapping secondary sources such as e-waste, used batteries, and end-of-life products, India can reduce its reliance on imported raw materials and support climate targets. 

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