Scheme to Promote Critical Mineral Recycling in the Country

₹1,500 Crore for Critical Mineral Recycling: A Necessary Start, but Insufficient for Self-Reliance

In a bid to reduce India's dependence on imported critical minerals, the Union Cabinet recently approved a ₹1,500 crore incentive scheme to develop domestic recycling capacity. To be implemented between FY 2025-26 and FY 2030-31, the scheme targets secondary sources such as electronic waste, Lithium-Ion Battery (LIB) scrap, and end-of-life vehicle parts. The aim is as ambitious as it is essential: to recycle scarce minerals like cobalt, lithium, and rare earth elements critical for EV batteries, clean energy, electronics, and defense technologies. Yet, the modest allocation raises immediate questions about whether this initiative, under the National Critical Mineral Mission (NCMM), is sufficiently equipped to tackle India’s burgeoning demand and global vulnerabilities.

The scale of the problem is clear. By 2030, India will generate approximately 340 kilotons of solar PV module waste and 500 kilotons of end-of-life EV batteries, according to government data. Simultaneously, India's push toward renewable energy and electric mobility demands staggering amounts of raw materials—many of which it currently imports, placing it at the mercy of geopolitical disruptions. For instance, China controls 85-90% of global rare earth refining capacity, as highlighted by its recent export curbs, exposing India's near-total dependence on external supply chains. But how transformative can this scheme be when the financial outlay, at ₹250 crore per year, pales in comparison to the scale of the challenge?

Institutional Design: The Nuts and Bolts of the Incentive Scheme

The Scheme for Critical Mineral Recycling is audacious on paper. It provides both capital expenditure (Capex) and operational expenditure (Opex) subsidies to encourage investments in new and expanded recycling units. Large recyclers are eligible for up to a ₹50 crore cap in incentives, while smaller entities—including startups—can claim a maximum of ₹25 crore. To further push participation, one-third of the ₹1,500 crore outlay has been reserved for recycling startups, arguably the most agile actors in this field.

Yet the scheme’s legal and operational foundations appear thinly spread. The NCMM, which oversees it, still lacks clear statutory backing or a detailed execution roadmap, leaving key questions unanswered. For instance, will the Ministry of Mines lead the charge, or will coordination fall under NITI Aayog or the Ministry of Environment, Forest, and Climate Change (MoEFCC)? Additionally, the ₹10 crore Opex cap for large recyclers and ₹5 crore for smaller ones seems unlikely to incentivize large-scale technology adoption, especially given the nascent state of domestic expertise in advanced recycling processes such as rare earth separation.

The Funding Gap and Historical Parallels

The ₹1,500 crore allocation must be juxtaposed against the financial realities of the sector. The required investments in recycling infrastructure alone could exceed ₹10,000 crore this decade, according to industry estimates. This gap is not without precedent. India's lithium battery recycling efforts faced a similar funding drought in the early 2020s, where hundreds of startups struggled to modernize operations due to high upfront capital requirements and delayed government incentives. The present scheme's stipulation to start production within a specified timeframe—or else risk reduced Capex subsidies—may exacerbate rather than resolve these financing bottlenecks.

Moreover, the sheer diversity of eligible materials—e-waste, LIB scrap, catalytic converters—cloaks the reality that each material demands distinct technologies and regulatory norms. Critical minerals like cobalt and lithium, for instance, require advanced hydrometallurgical or pyrometallurgical recycling units that few Indian firms currently possess. Without significant investments in research and development (R&D) to adapt these technologies, the scheme risks prioritizing quantity over quality.

Lessons from South Korea: Where India Falls Short

India could learn much from South Korea, a global leader in e-waste and battery recycling. South Korea recycles approximately 85% of its e-waste, owing to robust public-private partnerships (PPPs), mandatory extended producer responsibility (EPR) for manufacturers, and government-funded R&D programs in material science. The government’s targeted subsidies for recycling units extend far beyond India’s current scheme; for example, Samsung and LG are incentivized to recycle rare earth metals from old devices, lowering import dependency.

In stark contrast, India's e-waste recycling rate is a dismal 10% as of 2023, largely due to fragmented, informal networks. The critical mineral recycling scheme, as envisioned, fails to tackle the root causes of this dysfunction: weak collection systems, untrained labor, and poor coordination between urban local bodies, state agencies, and private recyclers. Without addressing these foundational issues, the stated goals of the scheme remain aspirational at best.

Structural Faultlines: Between Ambition and Execution

Beneath the scheme’s operational ambition lies a fundamental question of governance: Who owns the responsibility for outcomes? Inter-ministerial coordination could become a significant bottleneck. The Ministry of Mines, tasked with mineral policy, may lack the environmental expertise of MoEFCC when it comes to handling toxic e-waste and emissions from recycling units. This tug-of-war mirrors past coordination failures, such as the implementation of India’s Plastic Waste Management Rules, where overlapping jurisdictions led to poor enforcement.

Then there is the issue of data transparency. India currently has no centralized database for tracking critical mineral demand, waste generation, or recycling capacity. In its absence, aligning the recycling industry’s growth trajectory with domestic demand will remain guesswork. Further, environmental safeguards for recycling operations are not addressed in the government’s announcement. Recycling rare earths and lithium involves toxic byproducts that, if mismanaged, could nullify the scheme’s environmental benefits.

What Success Must Look Like

A genuinely transformative scheme must build beyond financial incentives to address structural weaknesses. Success metrics should include domestic processing capacity for critical minerals, a rise in formal recycling units, and measurable reductions in import dependency. A centralized regulatory framework, backed by real-time data on waste streams, is essential for effective oversight.

In the interim, building skills through dedicated training programs in waste management and separation technologies would help align workforce capacity with industry needs. The government must also strengthen its PPP model — encouraging multinational players with technological expertise to invest in India while ensuring knowledge transfer to domestic startups.

Time, however, is not a luxury. The acceleration of EV adoption, alongside global geopolitical uncertainties, leaves India with an increasingly narrow window to mitigate supply chain disruptions. The ₹1,500 crore scheme may signal intent, but transformational outcomes will require deeper financial and institutional commitments.

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