Cabinet Approves ₹1,500 Cr Incentive Scheme to Boost Critical Mineral Recycling

In a major step to strengthen India’s mineral security and supply chain resilience, the Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved a ₹1,500 crore Incentive Scheme to promote recycling of critical minerals from secondary sources. The scheme forms an integral part of the National Critical Mineral Mission (NCMM), which is aimed at building India’s self-reliance in critical minerals essential for clean energy, advanced technologies, and industrial growth.

Bridging the Supply Chain Gap

Critical minerals such as lithium, cobalt, nickel, rare earth elements, and platinum group metals are indispensable for renewable energy systems, electric vehicles, electronics, defense technologies, and green hydrogen production. However, developing a full-fledged domestic supply chain through exploration, auctions, and mining has a long gestation period.

To address short-term needs, the government has turned to secondary sources such as e-waste, lithium-ion battery (LIB) scrap, catalytic converters, and end-of-life vehicles. Recycling from these sources ensures a sustainable, cost-effective, and environmentally friendly way of securing essential minerals while reducing import dependency.

Tenure and Coverage of the Scheme

• Duration: Six years, from FY 2025-26 to FY 2030-31.

• Feedstock Sources: E-waste, LIB scrap, and other industrial and automotive scraps.

• Beneficiaries: Large, established recyclers as well as small and emerging players, including start-ups. Importantly, one-third of the total outlay has been reserved exclusively for small entities.

• Eligibility: Investments in new units, capacity expansion, modernization, and diversification of existing facilities.

• Scope: Incentives will only apply to the value chain involved in actual mineral extraction, not just pre-processing activities such as black mass production.

Incentive Structure

The scheme will provide a mix of Capex and Opex incentives:

• Capex Subsidy: 20% subsidy on plant & machinery, equipment, and associated utilities for units starting production within the specified timeframe. Delayed commissioning will attract reduced subsidy.

• Opex Subsidy: Linked to incremental sales beyond the FY 2025-26 base year. Beneficiaries will receive 40% of eligible Opex subsidy in the second year and the remaining 60% in the fifth year, subject to achieving specified thresholds.

• Ceiling on Incentives:

  • Large entities: Maximum ₹50 crore (Capex + Opex combined), with Opex capped at ₹10 crore.

  • Small entities: Maximum ₹25 crore, with Opex capped at ₹5 crore.

This structure has been designed to encourage timely investments, wider participation, and equitable distribution of benefits.

Anticipated Outcomes

The government expects the scheme to have far-reaching economic and environmental impacts:

• Establishment of at least 270 kilo tons of annual recycling capacity.

• Production of approximately 40 kilo tons of critical minerals per year.

• ₹8,000 crore in new investments over the scheme’s tenure.

• Creation of nearly 70,000 direct and indirect jobs across the recycling ecosystem.

• Support for India’s circular economy goals and reduction in import dependence for key minerals.

Industry Consultations and Stakeholder Support

The Ministry of Mines and MoEFCC held multiple rounds of consultations with industry leaders, trade bodies, recyclers, and other stakeholders through seminars, workshops, and dedicated meetings before finalizing the scheme. Feedback from these consultations has been incorporated to make the framework practical, industry-friendly, and aligned with global best practices.

Strategic Significance

Announcing the decision, government officials emphasized that the scheme will act as a catalyst for India’s energy transition and technological growth, especially in the context of ambitious national targets such as:

• Achieving net-zero by 2070.

• Expanding electric mobility and renewable energy capacity.

• Promoting Atmanirbhar Bharat (self-reliant India) by reducing dependency on imported minerals.

The scheme also dovetails with global supply chain diversification efforts, where India is positioning itself as a reliable partner in critical mineral value chains.

A Circular Economy Pathway

By incentivizing recycling and extraction from secondary sources, the Cabinet’s decision aligns with sustainability and environmental stewardship. It will help manage India’s growing e-waste challenge while simultaneously securing the resources needed for advanced manufacturing and green industries.

With this ₹1,500 crore incentive scheme, India takes a decisive step toward establishing itself as a critical mineral recycling hub, ensuring that economic growth and environmental protection go hand in hand.