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Dated: 18.09.2025
India’s Critical Minerals Recycling Incentive Scheme Introduced by Ministry of Mines
In a world increasingly dependent on critical minerals for strategic sectors like space, aeronautics, defense, electronics, fertilizers, and clean energy systems, India has taken a significant step forward. The Ministry of Mines has introduced the “Incentive Scheme for Promotion of Critical Minerals Recycling,” aimed at fostering domestic capacity, reducing import dependence, and addressing recycling capacity shortfalls. This blog delves into the details of the scheme, its objectives, eligibility criteria, incentive structure, and its potential impact on India’s economy and sustainability goals.
Background: Why Critical Minerals Matter
Critical minerals such as Cobalt, Lithium, Nickel, and Graphite are essential for high-tech applications and energy transition systems. However, India faces challenges due to limited reserves and high import reliance, with over 80% of these minerals being imported. The annual foreign exchange impact exceeds ₹80,000 crore, and the supply chain is vulnerable due to concentration of mining and processing in a few countries like China, Argentina, and Australia.
Recognizing these challenges, the Union Budget 2024-25 announced the establishment of the National Critical Mineral Mission (NCMM). This mission focuses on domestic production, recycling, and overseas acquisition of critical mineral assets. Recycling, or “urban mining,” is a key component of this mission, ensuring that imported and domestically produced materials are retained and utilized within the country.
Objectives of the Incentive Scheme
The primary objectives of the scheme are:
- Economic Resilience: Increase domestic capacity and reduce import dependence.
- Recycling Capacity Development: Address shortfalls in recycling capacity amidst growing feedstock availability.
- Supply Chain Sustainability: Build a reverse supply chain for critical minerals through secondary sources like e-waste and Lithium-ion Battery (LIB) waste.
Eligibility Criteria
The scheme targets recyclers of secondary products recovering and extracting critical minerals registered in India. Key eligibility requirements include:
- Authorization: Recycling facilities must be authorized by CPCB/SPCB.
- Grouping: Beneficiaries are classified into two groups based on Global Manufacturing Revenue (GMR):
- Group A: Large, established recyclers with GMR ≥ ₹200 crore.
- Group B: Small, new recyclers with GMR < ₹200 crore.
- Compliance: Existing units must comply with EPR Rules for e-waste, battery waste, and end-of-life vehicles. New units must register under applicable rules before starting operations.
Incentive Structure
The scheme offers financial incentives in three forms:
- Capex Subsidy:
- 20% subsidy on capital expenditure for new recycling units or expansion of existing units.
- Reduced rates (17% or 14%) apply if production starts beyond specified timelines.
- Subsidy covers plant, machinery, equipment, and associated utilities, with a cap on refurbished items.
- Opex Subsidy:
- Incentives on incremental sales over the base year (FY 2025-26).
- 40% subsidy in Year 2 and 60% in Year 5, subject to achieving sales thresholds:
- Group A: ₹60 crore in Year 2, ₹150 crore in Year 5.
- Group B: ₹30 crore in Year 2, ₹75 crore in Year 5.
- Hybrid Model:
- A combination of Capex and Opex subsidies.
Ceiling on Incentives:
- Group A: ₹50 crore overall, with ₹10 crore for Opex subsidy.
- Group B: ₹25 crore overall, with ₹5 crore for Opex subsidy.
Tenure and Governance
The scheme will run for six years, from FY 2025-26 to FY 2030-31. Applications will be invited for an initial six-month period, with ongoing appraisal and implementation. Governance mechanisms include:
- Project Management Agency (PMA): Responsible for application processing, disbursal of incentives, and periodic reporting.
- Executive Committee (EC): Appraises applications and recommends approval or rejection.
- Governing Council (GC): Periodically reviews the scheme’s progress and makes amendments as needed.
Impact on Recycling and Sustainability
India’s recycling capacity for critical minerals is currently limited, with only 10-12 recyclers handling approximately 100 ktpa of LIB waste. The scheme aims to quadruple this capacity to 400 ktpa by 2030, ensuring full utilization of feedstock. By incentivizing advanced recycling technologies like hydrometallurgy, the scheme focuses on actual extraction of critical minerals rather than basic collection and sorting.
Critical Minerals Under the Scheme
The scheme covers 27 critical minerals, including Lithium, Cobalt, Nickel, Graphite, Rare Earth Elements, and Titanium. These minerals are vital for industries ranging from electronics to clean energy systems.
Conclusion
The Incentive Scheme for Promotion of Critical Minerals Recycling is a landmark initiative that aligns with India’s vision of self-reliance and sustainability. By addressing recycling capacity shortfalls and incentivizing advanced technologies, the scheme not only reduces import dependence but also fosters economic resilience. As India moves towards a greener and more sustainable future, this scheme is a crucial step in building a robust supply chain for critical minerals.
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Source: Ministry of Mines
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