Cabinet Clears INR 1,500 Cr Scheme For Critical Mineral Recycling

SUMMARY

The scheme has been envisaged with developing at least 270 kilotons of annual recycling capacity

The Centre said that the scheme will result in the production of nearly 40 kilotons of annual critical minerals, create 70,000 jobs and enable INR 8,000 Cr worth of investments

The government will offer up to 20% subsidy on capital expenditure for plant and machinery, equipment and associated utilities for starting production

In a bid to reduce import dependence, the Union Cabinet on Wednesday (August 3) approved an INR 1,500 Cr incentive scheme to develop critical mineral recycling capacity in the country.

In a statement, the Centre said that the scheme has been envisaged with developing at least 270 kilotons of annual recycling capacity. This, as per the government, will result in the production of nearly 40 kilotons of annual critical minerals, create 70,000 direct and indirect jobs, and pave the way for the inflow of INR 8,000 Cr worth of investments into the country.

Under the scheme, the government will offer the following incentives:

20% subsidy on capital expenditure for plant and machinery, equipment and associated utilities for starting production within specified timeframe
Subsidies for operational expenditure (opex), which will include sops on incremental sales over the base year (FY26)

In an official statement, the Centre said that the applicants will be able to avail 40% of the “eligible” opex subsidy in the second year and the remaining 60% in the fifth year of operations on the achievement of specified threshold incremental sales.

“In order to ensure greater number of beneficiaries, total incentive (capex plus opex subsidy) per entity will be subject to an overall ceiling of INR 50 Cr for large entities and INR 25 Cr for small entities, within which there will be a ceiling for opex subsidy of INR 10 Cr and INR 5 Cr, respectively,” read the statement.

The new sops will be applicable to investments in new units as well as expansion of capacity and diversification of existing units.

“The scheme will have a tenure of six years from FY26 to FY31. Eligible feedstock is e-waste, lithium-ion battery (LIB) scrap, and scrap other than e-waste & LIB scrap e.g. catalytic converters in end-of-life vehicles,” added the Centre.

Meanwhile, the government also said that the expected beneficiaries of the scheme will be both established recyclers and new recyclers. A third of the outlay has been earmarked for budding players, including startups.

This scheme will operate under the National Critical Mineral Mission (NCMM), which was launched by the Centre in January this year with an outlay of INR 16,300 Cr.

Under the NCMM, the government has identified 24 minerals as “critical” for meeting the country’s net zero greenhouse gas emissions targets by 2070.

Months after the launch of the mission, Minister of Coal and Mines G Kishan Reddy expressed optimism that India could potentially meet the demand for critical minerals such as lithium locally in the next three to four years.

The latest scheme comes at a time when factors such as China’s restrictions on exports of certain critical minerals and Russia-Ukraine War have highlighted the fragility of the critical mineral supply chain and the need for diversifying India’s sources.

These minerals are critical components for India’s clean energy transition, electric vehicles, electronics, and advanced manufacturing sectors.

As of now, India is 100% import-dependent for at least 10 critical minerals – including lithium, cobalt, nickel, vanadium, while over 80% minerals like lithium and silicon are imported from China.