On September 3, the Union Cabinet approved a ₹1,500 crore scheme to promote critical mineral recycling after several rounds of consultations with industry and other stakeholders. With a tenure from FY 2025-26 to FY 2030-31, the initiative aims to cover all designated critical minerals from e-waste, scraps of lithium-ion battery (LIB) and catalytic converters from end-of-life vehicles. On October 2, the ministry of mines (MOM) released guidelines for implementing the scheme, with applications open until April 2026. The approved scheme is part of the National Critical Mineral Mission, aiming for self-reliance by enhancing the technological, regulatory, and financial ecosystems across critical mineral supply chains.
The provisions under the scheme indicate four things: Acknowledgement of the significance of recycling capabilities in securing resources; focus on resource efficiency; recognition of recyclers as integral to India’s quest for self-reliance across mineral supply chains. While the scheme would not eliminate import dependency on China, it can serve as an interim step to partly fulfil industrial needs.
It targets 270 kilo tonnes of annual recycling capacity, yielding 40 kilo tonnes of critical minerals, besides attracting ₹8,000 crore worth of investment and creating thousands of jobs. Beneficiaries include both established and smaller recyclers, including start-ups, with one-third of the outlay reserved for smaller entities. Applicable to both investments in new and modernisation of existing units, incentives include 20% Capex subsidy on plant and machinery within a specified timeframe, and Opex subsidy linked to incremental sales over the base year of FY 2025–26. Entities would be eligible for 40% of the Opex subsidy in the second year and 60% in the fifth year. Incentives per entity are capped at ₹50 crore for large firms and ₹25 crore for smaller ones to ensure a larger number of beneficiaries. Thus, incentive structure intends to offer mineral recyclers a roadmap to scale, modernise, and diversify capacity.
The scheme reflects India’s reactive approach. China’s April 2025 rare earth element (REE) export restrictions, following US tariffs, included seven REEs designated as critical minerals by the MoM. By July, Indian automakers, including EV manufacturers, faced production disruptions. This prompted the Automotive Component Manufacturers Association (ACMA) to press the government to raise concerns with Beijing. China, which supplied 93% of India’s REEs in 2024–25, has yet to resume exports, despite assurances from its foreign minister Wang Yi. No Indian importer has had its import applications cleared yet.
{{/usCountry}}The scheme reflects India’s reactive approach. China’s April 2025 rare earth element (REE) export restrictions, following US tariffs, included seven REEs designated as critical minerals by the MoM. By July, Indian automakers, including EV manufacturers, faced production disruptions. This prompted the Automotive Component Manufacturers Association (ACMA) to press the government to raise concerns with Beijing. China, which supplied 93% of India’s REEs in 2024–25, has yet to resume exports, despite assurances from its foreign minister Wang Yi. No Indian importer has had its import applications cleared yet.
{{/usCountry}}Even if exports resume or Beijing expedites approvals, the latter clearly is not a reliable long-term source, given its record of weaponising supply chains—something Delhi is becoming cognisant of. This acknowledgement expedited India’s efforts toward critical mineral security. Shortages have forced OEMs into costly stopgap measures like testing REE–free EV motors, and sending sub-assemblies to China for magnet integration before re-importing. Meanwhile, the government has planned a ₹5,000 crore programme to raise domestic REE production. Simultaneously, India is pursuing alternative suppliers such as Japan and Myanmar, even as Indian recyclers such as Lohum Cleantech strive to significantly upscale their capacity in the near term.
Meanwhile, rising domestic demand for EV batteries and green technologies added urgency to the recycling scheme’s launch. Demand is set to triple by 2030, with EVs requiring six times the critical minerals of traditional cars. India, fully import-dependent for these inputs, aims for EVs to make up 30% share of vehicle sales by 2030. Without recycling capacity, India’s EV ambitions risk remaining hostage to China, which accounts for over 70% of India’s annual EV battery pack supplies. Leading alternative suppliers like Australia and Congo are unviable options, given their reliance on Beijing for processing lithium, nickel, and cobalt.
With long gestation periods—exploration and prospecting alone taking two to eight years—recycling appears a near-term option to ensure mineral availability. Yet developing recycling capacity at the required scale to mitigate dependence could take over a decade, as Japan’s experience shows. Currently, India’s recycling capacity remains limited—merely 22% of annual e-waste, and one to five% of LIB is recycled, suggesting the long road ahead.
Becoming self-reliant across supply chains remains a long-term endeavour for India—likely to remain over-reliant on China for at least a decade. The recycling scheme also needs to be considered through a broader context—the main mineral supply chain challenges: extraction, processing, and policy framework.
Despite the recent flurry of reforms through the Mines and Minerals (Development and Regulation) Amendment Bill, 2025, a key issue vis-à-vis extraction remains unresolved. The scrapping of auctioned mineral blocks by the MoM, owing to a lack of the minimum required bidders, remains common. This stems from outdated resource classification rules with inadequate exploration data about the economic viability of mining a block. For firms making costly investments, such data with high geological confidence remains essential. Furthermore, many deposits lie too deep to be extracted with available technology. For example, despite 5.9 million tonnes of lithium reserves in Jammu and Kashmir, the country lacks the capacity to exploit them. Similarly, cobalt and nickel deposits remain unconverted into mineable reserves.
The processing capabilities symbolise another weak link. Critical refining technologies like vapor metallurgy remain absent owing to inadequate government attention. While India has two copper smelting firms ranked among the top ten worldwide, domestic production still meets only a fraction of demand, with rising imports of refined copper. REEs reflect a similar paradox, or a resource curse: despite having the world’s sixth-largest reserves, its global share in mined and processed neodymium is a meagre 1% and 3%, respectively. Limited private participation has also contributed to the severe underutilisation of the mineral reserves.
Other policy gaps further compound these structural issues. While Production-Linked Incentive (PLI) schemes for automobile and batteries have spurred growth in EVs and auto components, they fall short in reducing import dependence for required critical raw materials—critical minerals. Benefits can still be claimed even when most components are imported and merely assembled domestically.
Given these issues, industrial needs, and chronic dependence, the recycling scheme reflects India’s long-overdue acknowledgement: The circular economy is not merely an environmental aspiration but an economic and strategic necessity.
This article is authored by Araudra Singh, research assistant, Council for Strategic and Defence Research, New Delhi.