The Union Cabinet has approved a ₹15 billion (~$170.19 million) incentive program to develop India’s recycling capacity for separating and producing critical minerals from secondary sources such as e-waste and lithium-ion battery scrap.

This program is a part of the National Critical Mineral Mission, under the Ministry of Mines, which aims to build domestic capacity and supply chain resilience for critical minerals.

The Union Cabinet approved the National Critical Mineral Mission in January this year. This initiative will have an estimated expenditure of ₹163 billion (~$1.88 billion) and an expected investment of ₹180 billion (~$2.07 billion) by public sector undertakings and other entities.

Critical minerals are used in manufacturing batteries for electric vehicles and energy storage, making them crucial for India to meet its energy transition and net-zero goals.

The government said the incentive program is expected to develop at least 270 kilotons of annual recycling capacity, leading to the recovery of approximately 40 kilotons of critical minerals annually. This production is projected to attract roughly ₹80 billion (~$907.67 million) in investments and create 70,000 direct and indirect jobs.

The program will have a tenure of six years until financial year (FY) 2031. Eligible feedstock for recycling will include e-waste, lithium-ion battery (LIB) scrap, and scrap from sources other than e-waste and LIB, such as catalytic converters from vehicles at the end of their life.

Expected beneficiaries include large, established, small, and new recyclers (including startups). One third of the program’s outlay has been earmarked for small and new recyclers.  The program will apply to investments in new units, expansions of existing capacity, and the modernization and diversification of existing units.

It will allocate incentives for the recycling value chain involved in actual critical mineral extraction. Value chain entities involved only in black mass production will not receive incentives.

The incentives will include a 20% capital expenditure subsidy on plant and machinery, equipment, and associated utilities. This subsidy will be provided when production is initiated within a specified timeframe. Production beyond this period will be eligible for a reduced subsidy.

The incentives will also include an operational expenditure (OPEX) subsidy, which will be based on the incremental sales after FY 2026. This subsidy will be provided in two parts: 40% in the second year and the remaining 60% in the fifth year.

The total incentives will have a ceiling of ₹500 million (~$5.67 million) for large and ₹250 million ($2.83 million) for small entities. Of these amounts, the OPEX subsidy will have a ceiling of ₹100 million (~$1.13 million) and ₹50 million (~$567,297), respectively.

In 2023, the government identified 30 critical minerals, including lithium, cobalt, nickel, graphite, and silicon, used in the renewable energy sector.