Cabinet Approves Rs 1,500 Crore Incentive Scheme to Enhance Recycling of Critical Minerals in India

The Union Cabinet has sanctioned a Rs 1,500-crore incentive scheme to boost the recycling of critical minerals in India. This initiative aims to enhance the country's recycling capacity for extracting and producing essential minerals from secondary sources. The scheme is expected to develop at least 270 kilo tonnes of recycling capacity annually, leading to around 40 kilo tonnes of critical mineral production each year.

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According to the mines ministry, this scheme is a component of the National Critical Mineral Mission. It seeks to strengthen domestic capabilities and ensure supply chain resilience for critical minerals. The government has allocated Rs 16,300 crore for this mission, with a total budget of Rs 34,300 crore over seven years, aiming for self-reliance and advancing India's green energy transition.

Recycling Incentives and Investment

The scheme will offer incentives for the recycling value chain involved in extracting critical minerals, excluding those only producing black mass. Eligible feedstock includes e-waste, Lithium Ion Battery (LIB) scrap, and other scrap like catalytic converters from end-of-life vehicles. The scheme will apply to investments in new units and expansions or modernisation of existing ones.

Incentives include a 20% capex subsidy on plant machinery and equipment for starting production within a specified timeframe. If production starts later, a reduced subsidy applies. Additionally, an Opex subsidy will be provided as an incentive on incremental sales over the base year 2025-26: 40% in the second year and the remaining 60% in the fifth year from 2026-27 to 2030-31 upon reaching specified sales thresholds.

Beneficiaries and Subsidy Limits

The scheme targets both large established recyclers and small new recyclers, including start-ups. One-third of the scheme's outlay is reserved for these smaller entities. The total incentive per entity—capex plus opex subsidy—is capped at Rs 50 crore for large entities and Rs 25 crore for small ones. Within this, the Opex subsidy is limited to Rs 10 crore and Rs 5 crore respectively.

Critical minerals like copper, lithium, nickel, cobalt, and rare earth elements are vital raw materials needed for clean energy technologies. The scheme's tenure spans six years from FY26 to FY31. It focuses on developing domestic capacity to support India's transition towards green energy by ensuring a sustainable supply chain through recycling secondary sources.

The critical mineral value chain involves exploration, auctioning, mine operationalisation, and acquiring foreign assets. These processes have a gestation period before they can supply critical minerals domestically. Recycling secondary sources is considered a prudent approach to ensure near-term supply chain sustainability.

This initiative is projected to attract about Rs 8,000 crore in investment while creating nearly 70,000 jobs—both direct and indirect. By promoting recycling efforts, India aims to reduce dependency on imports and bolster its position in the global clean energy market.

With inputs from PTI