The Indian government’s ambitious Rs 1,500 crore incentive scheme for critical mineral recycling, approved on September 3, 2025, apparently seems to be a pragmatic recognition that the nation’s clean energy transition including that for automobiles hinges on not only scorching on new technologies, exploring abundant supplies of critical materials, but also on mastering the circular economy.
The scheme, operating under the National Critical Mineral Mission (NCMM) framework from fiscal year 2025-26 to 2030-31, targets the establishment of at least 270 kilo tonnes per annum of recycling capacity.
This capacity is expected to yield approximately 40 tonnes of critical minerals annually, potentially addressing 30-40% of India’s domestic lithium demand by 2028.
For those unitiated, The National Critical Mineral Mission (NCMM), launched in 2025, is India’s blueprint to secure domestic and global supply chains of critical minerals. NCMM targets 1,000 patents by 2030, with the creation of seven Centres of Excellence to drive breakthroughs in exploration and extraction.
The scheme outline a proposed expenditure of Rs.16,300 crore and an expected investment of Rs.18,000 crore by Public Sector Undertakings (PSUs) and other stakeholders. Ministry of Mines consider 30 critical miinerals which are vital for India, such as cobalt, copper, lithium, nickel, cadmium, among others.
For electric vehicles, critical minerals such as lithium, nickel, and cobalt form an important part of the battery systems. With the government pushing for 30% EV penetration by 2030, the hunger for these resources is set to multiply.India faces a stark reality: without domestic recycling capacity, its green ambitions remain hostage to volatile global supply chains.
The scale of the challenge becomes evident in the numbers: For instance, India’s battery recycling market, valued at $152.68 million in 2025, is projected to reach $235.57 million by 2030 at a CAGR of 9.06%, as per a report by Mordor Intelligence.
Yet recyclers collected only 2,570.26 metric tonnes of lithium-ion waste batteries from electric vehicles in the last three years, as per government records until April 2025. It is just a fraction of what will emerge as the current generation of EVs reaches end-of-life.
The incentives and conditions
The subsidy package is designed with both upfront investment support and operating performance incentives. On the investment side, companies setting up new capacity can claim a 20% subsidy on capital expenditure covering plant, machinery, equipment and related utilities, provided production starts within the stipulated time frame.
To encourage sustained performance, the scheme also includes an operating expenditure-linked incentive. This will be calculated on incremental sales made over the base year of FY 2025-26.
The payout is staggered, with 40% of the eligible subsidy being released in the second year and the remaining 60% released in the fifth year, running across FY 2026-27 to FY 2030-31, subject to a company crossing the specified sales thresholds.
To ensure wider participation and prevent concentration of benefits, an overall cap has been introduced. Large entities can claim up to Rs.50 crore in combined Capex and Opex subsidies, while smaller entities have a ceiling of Rs.25 crore. Within this, the Opex subsidy itself has a sub-limit of Rs.10 crore for larger players and Rs.5 crore for smaller ones.
Economic dynamics of recycling buiness
Companies operating in this space report gross margins between 15% to 38%, heavily dependent on commodity price fluctuations. Anupam Kumar, Co-Founder & CEO, MiniMines provides the insights about the economics of critical mineral recycling which reveal both promise and complexity.
He explained that for every tonne of battery waste processed, recyclers invest approximately Rs 2-2.5 lakh in raw material costs. The processing costs take it to upwards of Rs 4 lakh in expenses., generating revenues of Rs 6.5-7 lakh, a business model entirely driven by global commodity markets.
Lessons from India’s Recycling Missteps
The plastic recycling sector offers sobering lessons for critical mineral recycling ambitions. India generates nearly 9.5 million tonnes of plastic waste out of which only 60% recycled, many a times in an inefficient manner by informal sector, demonstrates how supply-demand imbalances can undermine recycling economics.
The proliferation of plastic recyclers, numbering over 500-600 in Northern India alone, has created artificial scarcity that drives up feedstock prices to economically unviable levels.
Some established players in the business remark that while allowing for several recyclers will definitely lead to healthy competition, but just like the plastic recycling industry, there are also chances that scrap suppliers are likely to “increase prices irrationally” due to excessive demand. This situation makes the economics of recycling unworkable because the cost of scrap becomes too high
Furthermore, the plastic recycling industry, similar to the electronic e-waste industry, also suffers from weak enforcement mechanisms, with over several lakhs of fake recycling certificates reportedly identified in Gujarat, Maharashtra, Karnataka just around three years ago.
Therefore, the critical mineral recycling scheme must navigate infrastructure gaps that have plagued other recycling sectors. Currently, the battery recycling ecosystem comprises only four-six major players capable of end-to-end processing: Loham, revenue), Mini Mines, Attero, among others.
However, hundreds of other players are also present who merely crush batteries to extract black mass, an intermediate product, for trading, lacking the technological capability to extract elemental salts.
The Path Forward
The Rs 1,500 crore critical mineral recycling scheme emerges from India’s recognition that the circular economy is not merely an environmental aspiration but an economic and strategic necessity.
As the automotive sector transitions toward electrification, the ability to recover and reprocess critical materials from waste streams will determine supply chain resilience and cost competitiveness.
However, the experiences of plastic and electronic waste recycling sectors underscore that financial incentives alone cannot guarantee successful outcomes. The scheme’s success will ultimately depend on creating a regulatory framework that prevents the market fragmentation and quality degradation that have plagued other recycling initiatives, while ensuring that India builds genuine technological capabilities rather than perpetuating dependency in new forms.