Cabinet approves Rs 1,500-crore incentive scheme to boost critical mineral recycling

New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved a Rs 1,500-crore incentive scheme to develop domestic recycling capacity for the separation and production of critical minerals from secondary sources. The scheme is part of the National Critical Mineral Mission (NCMM), which is aimed at strengthening India’s supply chain resilience in critical minerals. These minerals are essential for clean energy technologies, advanced electronics, and defence manufacturing. They play a key role in batteries, renewable energy systems, electric vehicles, and strategic applications.

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Focus on supply chain sustainability

Critical mineral exploration, auctioning, mine development and acquisition of foreign assets are long-gestation processes, and domestic supply is limited. The government noted that recycling from secondary sources such as e-waste and lithium-ion battery (LIB) scrap provides a prudent short-term path to ensure supply chain sustainability.

The scheme will run for six years, from FY 2025-26 to FY 2030-31. Eligible feedstock includes e-waste, LIB scrap, and other materials such as catalytic converters in end-of-life vehicles. Beneficiaries will include both large, established recyclers and new entrants, including start-ups, with one-third of the outlay reserved for smaller entities.

Subsidy structure and ceilings

The scheme will provide a 20 percent capex subsidy on plant, machinery and equipment for new or expanded units that begin production within the specified timeframe, with a lower subsidy rate applicable thereafter. It will also offer opex subsidies linked to incremental sales over the FY 2025-26 base year, comprising 40 percent of eligible subsidy in the second year and 60 percent in the fifth year, subject to thresholds.

To widen participation, incentives will be capped at Rs 50 crore for large entities and Rs 25 crore for small recyclers, with opex subsidies limited to Rs 10 crore and Rs 5 crore, respectively.

Expected outcomes

The government said the scheme is expected to develop at least 270 kilo tonnes of annual recycling capacity, resulting in 40 kilo tonnes of annual critical mineral production. It is also projected to attract Rs 8,000 crore of investments and create about 70,000 direct and indirect jobs.

The ministry added that extensive consultations with industry and stakeholders were held through dedicated meetings and seminars before finalising the scheme.

Background

India’s limited domestic reserves of critical minerals have left it almost entirely reliant on imports for these vital resources. At the same time, nearly 90 percent of the world’s capacity to process and recycle critical minerals is concentrated in China. This imbalance means India’s high-tech and clean energy industries are heavily exposed to supply chain disruptions and geopolitical risks, as any export curbs or diplomatic rifts could suddenly choke off essential mineral supplies.

Building up domestic processing and recycling capabilities has thus become a strategic and economic imperative for India. By developing its own infrastructure to refine and reuse critical materials, the country aims to reduce import dependence, insulate its economy from global supply shocks, and secure more control over the inputs that underpin modern industries and national security.

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