Policy Update
Gowri Kodali
Introduction
The demand for critical minerals is on the rise, especially for clean energy and electric vehicles. These minerals are crucial for industry and the production of strategic goods. The cost and time required to explore and develop new mineral resources abroad make it important for India to focus on recycling critical minerals, especially given that India imports nearly 100% of its requirements for several critical minerals like lithium, cobalt, and nickel. The Union Cabinet approved the Critical Mineral Recycling Incentive Scheme from 2025-2026 to 2030-2031 for a period of six years on 3 September 2025. The scheme provides an outlay of ₹ 1500 crore. The objective of the scheme is to develop the capacity to extract critical minerals from electric and electronic waste and scrap (PIB 2025a).
The scheme aims to ensure India’s critical mineral supply by promoting the building and operation of critical mineral recycling plants within the country. The scheme will focus on the mechanisms and incentives to establish critical mineral recycling facilities and improve the associated research, development, and demonstration. The emphasis will be on critical minerals that are in short supply and in high demand in India. In order to encourage research and development, up to 50 percent of the project cost will be covered for the first three years of the scheme. The loan will be repaid after the third year of the scheme (PIB 2025b). The scheme aims to increase the domestic supply of critical minerals and improve the country’s self-reliance in critical minerals.
The National Critical Mineral Mission, approved on January 29, 2025, is focused on developing the critical mineral value chain, that is, exploration, mining, processing, beneficiation, recycling and recovery from spent products. Establishing mines and developing primary mineral supply chains is time consuming, capital intensive and risky. It takes even longer to get minerals to the domestic industry, should the need arise. Meanwhile, recycling of critical minerals from e-waste, used batteries and industrial scrap can help meet the requirements. The Recycling Incentive Scheme which is part of large initiatives by the government of India, aims at creating a circular economy, producing critical minerals from secondary raw materials and reducing dependence on imports and traditional primary minerals (PIB, 2025a; Ministry of Mines, 2025a).
The Scheme provides for funding of new recycling projects and the expansion and modernisation of existing projects. It helps in achieving the goals set by the government. Both large and small companies, including start-ups, are eligible for financial assistance. The Scheme provides for recycling of critical minerals and does not encourage projects where critical minerals are recovered as a by-product (PIB, 2025a; Ministry of Mines, 2025a).
The framework provides both capital and operational incentives. Capital subsidies cover 20% of eligible investments in plant, machinery and equipment and related utilities. Support is provided on commencement of production and is valid for a period. Delays in commencement of production attract a reduction in the level of support. Operational incentives are available for eligible sales or turnover in excess of the base year (FY 2025-26). The support is available for a period of two years, and five years respectively, subject to performance conditions. The aggregate support available for large scale enterprises is limited to ₹50 crore and ₹25 crore for small scale enterprises. Operational support is capped at ₹10 crore and ₹5 crore respectively. The procedures for application, assessment of entitlements, allocation and payment of the incentives, and performance conditions are specified in the guidelines issued on 2 October 2025. The Jawaharlal Nehru Aluminium Research Development and Design Centre (JNARDDC) functions as the Project Management Agency, under the Ministry of Mines (2025a), the PIB (2025a, 2025b).
Functioning
The scheme provides financial assistance for establishment of recovery infrastructure and its operations. Support is provided for capital expenses and operational costs, thereby significantly reducing the upfront investment and encouraging commercial production. Acknowledging that black mass production does not lead to the extraction of critical minerals, the scheme does not support operations related to black mass production. Therefore, the scheme supports actual mineral extraction beyond waste processing. Allocating 30% of the scheme outlay to small and newly set up recyclers helps to encourage wider participation in the scheme (PIB, 2025a; Ministry of Mines, 2025a).
However, achievement of the targets should be assessed on the basis of actual production of mineral output. As of April, 2026, 58 eligible entities had taken up the commitment to establish a recycling capacity of 850 KTPA. The Ministry of Mines considered execution of the project and commencement of production as the subsequent steps. Hence, eligibility and investment commitments by potential investors cannot be considered as accomplishment of setting up recycling capacities. Overreliance on announced capacities may lead to a false sense of achievement. It is relevant to assess the quantity of mineral output and its contribution towards meeting the country’s industrial requirements (PIB, 2026a).
Performance
At the time of approval, it was anticipated that the scheme would build an annual recycling capacity of at least 270 kilotonnes, resulting in an annual production of 40 kilotonnes of critical minerals. The scheme was also expected to attract an investment of approximately ₹8,000 crore and create an employment of 70,000 (PIB, 2025a). After the operational guidelines were released, application was invited from 2 October 2025 to 1 April 2026. The first phase of the scheme focused on awareness building by JNARDDC on processes and procedures to register, eligibility and documentation and also mechanisms to release incentives. On 21 November 2025, JNARDDC conducted a workshop, which was attended by approximately 30 beneficiaries (start-ups, existing recyclers, technology providers and other industries) (PIB, 2025b, 2025c).
By April 2026, the Ministry of Mines had assessed the eligibility of 58 entities of which the Executive Committee approved all. Of these, 20 were approved on 30 March and 38 on 29 April 2026. The entities have jointly committed to establish a recycling capacity of 8.50 lakh tonnes per annum (KTPA) and an investment of ₹5000 crore towards battery recycling and electronic waste processing and allied industries. The committed recycling capacity was over three times the target of 270 KTPA, reflecting industry’s confidence in the scheme. The commitments are not of fully operational facilities or actual production of critical minerals (PIB, 2026a).
Beyond resource security, scaling domestic recycling significantly cuts down lifecycle greenhouse gas emissions and directly supports India’s broader climate commitments under its Nationally Determined Contributions (NDCs) and net-zero transition goals.
These outcomes can be tracked transparently through the Ministry of Mines’ dedicated Critical Mineral Recovery Dashboard and periodic progress updates published via Press Information Bureau (PIB) releases and annual reports.
Impact
Beyond capacity creation, the scheme acts as a catalyst for establishing resilient downstream mineral supply chains essential for clean energy and advanced manufacturing. The scheme offers fiscal and operational incentives to set up a structured domestic recycling industry. Capital and operational incentives are expected to set up an organized domestic recycling industry and allocation to small recyclers will encourage participation. Estimates show that the scheme is expected to catalyze an investment of approximately ₹8,000 crore and create 70,000 jobs (PIB, 2025a; Ministry of Mines, 2025b).
The scheme aims to achieve the objectives of the circular economy by recovering critical materials from end of life products. Recycling minerals can help meet the domestic production of critical minerals. Successful commercial recovery of the minerals will help realize the benefits of the scheme. Though there are 58 entities who have committed to invest in the scheme (PIB, 2026a), producing the desired minerals will demonstrate if the scheme is successful in achieving import substitution and strengthening the domestic supply chain. Furthermore, the scheme catalyzes the formalization of India’s largely unorganized e-waste and battery recycling sectors, ensuring environmentally sound dismantling practices, curbing toxic land pollution, and ensuring safe hazardous waste handling.
Key Challenges
There will be considerable challenges in the implementation of the project, in particular, the sourcing of feedstock. Establishment of collection centers for various waste streams, including e-waste and used batteries, will require significant investments and time, and the success of the project will largely depend on this. If there are challenges in collection and adequate separation and diversion of recyclable waste, it will negatively impact the use of available collection and sorting facilities. Considering the existence of black mass, and assuming that the supported facilities focus on the value-added side of the recycling process, it is important to monitor extraction of minerals. It can be that the facilities supported by the scheme perform only preliminary processing of the black mass.
Success will also largely depend on the ability to distinguish between declared and actual operational capacities. The 850 KTPA pledged by eligible entities is an expression of intent, and not a real operational capacity, and hence, it can be assumed that realization and verification of actual operations and production will be the key to the success of the scheme (PIB, 2026a). Given the existing collection systems, it will also take time to build up recycling capacities and systems. Along with this, improvement in recovery systems is also essential.
WayForward
Measurable mineral recovery should take precedence over facility and recycling capacity in the subsequent implementation of the scheme. A dedicated Critical Mineral Recovery Dashboard should be developed by the Ministry of Mines to systematically display permitted projects, operational facilities, feedstock, recovery and actual production, mineral-wise. Reporting would provide better insight into pledged vs. operating recovery capacity and add transparency to the performance evaluation. The criteria to determine incentives could be amended to reflect the scheme’s distinction between intermediate mineral processing and critical mineral recovery. Stronger integration of Extended Producer Responsibility (EPR) frameworks for batteries and e-waste could improve the availability of feedstock. Traceability of materials from collection to final recovery would aid in more accurate reporting (Ministry of Mines, 2025a; PIB, 2026a).
Additionally, the implementation support provided to small and emerging recyclers should be strengthened. One-third of the allocated funds remain unutilized (PIB, 2025c). Frequent evaluation of policy to assess mineral-wise recovery, its impact on domestic demand, potential import substitution and the environment should be carried out. Linking recovery to finance would encourage the industry to make the investment pledges (Ministry of Mines, 2025b; PIB, 2026a).
Conclusion
The Critical Mineral Recycling Incentive Scheme provides a robust financial and institutional framework for developing India’s domestic mineral recovery capabilities. By combining capital and operational incentives with a strict emphasis on actual mineral extraction rather than intermediate processing, the scheme strategically integrates recycling into the broader objective of long-term supply-chain resilience (PIB, 2025a; Ministry of Mines, 2025a). The strong initial wave of industry participation underscores widespread stakeholder confidence. However, the scheme’s effectiveness will ultimately depend on converting these commitments into operational facilities, verified mineral recovery and measurable contributions to domestic mineral availability. Moving from pledged recycling capacity to commercially recovered critical minerals will therefore determine its long-term contribution to India’s circular mineral security (PIB, 2026a).
References
Ministry of Mines. (2025a). Scheme guidelines for critical mineral recycling incentive scheme. Government of India. https://mines.gov.in/admin/storage/ckeditor/SCHEME_GUIDELINES_02_1759320252.pdf
Ministry of Mines. (2025b). National Critical Mineral Mission. Government of India. https://mines.gov.in/admin/storage/ckeditor/NCMM_Notification_%281%29_1751518347.pdf
Press Information Bureau. (2025a, September 3). Cabinet approves Rs. 1,500 crore incentive scheme to promote critical mineral recycling in the country. Ministry of Mines, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2163455
Press Information Bureau. (2025b, October 4). Ministry of Mines issues guidelines for ₹1,500 crore critical mineral recycling incentive scheme. Government of India. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2174715
Press Information Bureau. (2025c, November 25). Development of 3 lakh ton annual recycling capacity for critical mineral extraction envisaged from the ₹1,500 crore incentive scheme. Ministry of Mines, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=219418
Press Information Bureau. (2026a, April 30). India advances critical mineral security: 58 companies eligible for recycling scheme. Ministry of Mines, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2256977
About The Author
Gowri Kodali is pursuing a Master’s in Economics and currently serves as a Research and Editorial Intern at the Impact and Policy Research Institute (IMPRI).
Acknowledgment
I sincerely thank the IMPRI team for providing the opportunity to research and write this Policy Update. I am grateful for the guidance and feedback that helped strengthen the analysis and presentation of this article.
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