The Indian government launched an incentive scheme under NCMM to boost critical mineral recycling, enhancing domestic capacity, reducing import reliance, ensuring supply security, and promoting environmental sustainability.

Why in the News?

The Ministry of Mines has issued detailed guidelines for the Incentive Scheme for the Promotion of Critical Mineral Recycling.

Key features of the scheme

It is part of the National Critical Mineral Mission (NCMM).
Ministry: The Ministry of Mines
Aim: To incentivize the development of recycling capacity for the separation and extraction of critical minerals from eligible waste streams within the country.
Tenure: 6 years (from FY 2025-26 till FY 2030-31).
Financial Outlay: ₹1,500 crore.
Eligible Feedstock: Includes e-waste, Lithium-Ion Battery (LIB) scrap, and other scraps such as catalytic converters from end-of-life vehicles.
- Schemes covers 27 critical minerals including Antimony, Cadmium, Cobalt, Gallium, Graphite, Lithium, Nickel, Niobium, Rare Earth Elements (not containing Uranium and Thorium) etc.
Beneficiaries: Both large and small/new recyclers (including start-ups).
Incentive Mechanism:
- Capital expenditure (capex) subsidy: Upto 20% capital expenditure subsidy on plant and machinery for timely production.
- Operational expenditure (opex) subsidy: on incremental sales; 40% in the 2nd year and 60% in the 5th year (FY 2026-27 to FY 2030-31)
- Incentive Ceilings: Total incentives per entity capped at ₹50 crore for large entities and ₹25 crore for small entities, within which there will be a ceiling for Opex subsidy of Rs.10 crore and Rs.5 crore respectively.

About Critical minerals

Minerals that are naturally occurring elements and compounds essential for a country's economic development and national security but facing significant supply-related challenges, often stemming from limited geographical occurrences or sourcing vulnerabilities.
Ministry of Mines identified 30 critical minerals for India including Bismuth, Cobalt, Copper, Phosphorous, Potash, Rare Earth Elements (REE), Silicon, Tin, Titanium, etc.
- 24 minerals from the list were included in Part D of the First Schedule of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act).

Significance of Recycling of Critical Minerals

Strengthening Domestic recycling Infrastructure: It will enhance the technological, regulatory, and financial ecosystems for processing and recycling such as chemical processing, metallurgical extraction, or R3 and R4 level recycling of LIB scrap.
- The scheme incentives is expected to develop at least 270 kilo ton of annual recycling capacity resulting in around 40 kilo ton annual critical mineral production.
Securing Supply and Mitigating Geopolitical Risk: Critical minerals are vital for modern technology and their supply chain is fragile and vulnerable due to the geographical concentration of their production and processing.
- China controls ~60-70% of rare earth production and placed export restrictions on rare earth elements (REEs) and magnets used in the defence, energy, and automotive sectors.
Saving forex reserves: Recycling, often referred to as urban mining, can reduce India's reliance on importing saving valuable forex reserves.
- Import on four critical minerals - lithium (apart from lithium ion), cobalt, nickel and copper alone was around ₹34,800 crore in FY23-24.
Environmental and Sustainability Goals: It will help improve E-Waste Management, conserving natural resources and reducing pollution from new mines.
Formalization of industry: It is estimated to bring in Rs.8,000 crore of investment and creating 70,000 direct and indirect jobs as envisaged in recycling scheme.