Why in the News?

• Union Cabinet approved Rs. 1500 Crore Incentive scheme to develop recycling capacity of critical minerals in India.

Incentive Scheme for Critical Mineral Recycling

• Need for the Scheme:
  • As exploration and conventional mining for critical minerals have long gestation periods, recycling offers a faster and more sustainable route to ensure domestic availability of lithium, cobalt, nickel, and rare earth elements- without reliance on imports.
  • Strategic urgency: The move follows China’s April export restrictions on seven medium and heavy rare earth elements, which jolted supply chains globally and highlighted India’s vulnerability to foreign supply shocks.
• Key Features:
  • Financial Outlay: 1500 Crores
  • Beneficiaries: Both established large recyclers and new small players including start-ups are targeted; one-third of funds earmarked for emerging recyclers.
  • Coverage: Targets recycling of lithium-ion batteries, e-waste, and catalytic converters to reduce import dependence, generate green jobs, and support sectors such as EVs and electronics.
  • Incentive Structure:
    • Capex Subsidy: 20% subsidy on plant & machinery, equipment, and utilities, if production starts within a specified timeframe; subsidy levels reduce thereafter.
    • Opex Subsidy: Based on incremental sales over the base fiscal year (FY 2025–26): 40% in the second year, then the remaining 60% can be availed between FY 2027–28 and FY 2030–31, upon meeting thresholds.
    • Subsidy Caps:
      • Large entities: Total capex + opex support up to ₹50 crore; opex subsidy limited to ₹10 crore.
      • Small entities/start-ups: Up to ₹25 crore total; opex subsidy capped at ₹5 crore.
• Projected Impact:
  • Recycling capacity: Development of at least 270 kilo-tonnes annual capacity, resulting in about 40 kilo-tonnes of critical mineral production.
  • Investment & jobs: Expected to attract ₹8,000 crore in investment and generate nearly 70,000 direct and indirect jobs.
• Strategic Significance:
  • This initiative strengthens India’s circular economy, enhancing supply chain resilience and reducing dependency on imports.
  • It fosters green jobs and supports the sustainability of high-growth sectors like EVs, renewables, and electronics.
  • By incentivizing domestic recycling infrastructure, the scheme complements long-term mining strategies under NCMM to ensure a robust and self-reliant critical mineral ecosystem.

National Critical Mineral Mission (NCMM)

• Objectives:
  • To ensure India’s self-reliance in critical mineral resources.
  • Strengthen India’s supply chain for critical minerals through domestic exploration, overseas asset acquisition, and technological innovation.    
• Ministry: Union Ministry of Mines
• Features:
  • Setting up mineral processing parks and supporting the recycling of critical minerals.
  • Promote research in critical mineral technologies and proposes setting up Centre of Excellence on Critical Minerals.
  • It also proposes development of a stockpile of critical minerals within the country.
  • It encourages Indian PSUs and private sector companies to acquire critical mineral assets abroad and enhance trade with resource-rich countries.
• Significance:
  • Supports India’s renewable energy transition (e.g., lithium for batteries, rare earths for electronics).
  • Reduces dependence on China and other foreign suppliers for key minerals.
  • Strengthens national security by securing supply chains for defence applications.

Critical Minerals

• Critical minerals are those minerals that are essential for economic development and national security, the lack of availability of these minerals or concentration of extraction or processing in a few geographical locations may lead to supply chain vulnerabilities and even disruption of supplies.
• The 30 critical minerals are- Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, REE, Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium and Cadmium.