NEW DELHI: The government on Wednesday approved a Rs 1,500 crore incentive scheme to source critical minerals from secondary sources or used products.
According to the Ministry of Mines, critical minerals such as rare earth magnets will be obtained from lithium-ion battery (LIB) scrap and other non-e-waste scrap, such as catalytic converters from end-of-life vehicles.
The scheme’s incentives are expected to help develop at least 270 kilotonnes of annual recycling capacity, resulting in approximately 40 kilotonnes of critical mineral production per year. It is projected to attract around Rs 8,000 crore in investment and create nearly 70,000 direct and indirect jobs.
“A prudent way to ensure supply chain sustainability in the near term is through the recycling of secondary sources,” said the ministry in a press note.
The scheme will have a tenure of six years, from FY 2025–26 to FY 2030–31. According to the government, expected beneficiaries will include both large, established recyclers and smaller or new recyclers (including start-ups), with one-third of the scheme outlay earmarked for the latter.
The scheme will apply to investments in new units as well as in the expansion, modernization, or diversification of existing units. Incentives will be provided for the recycling value chain involved in the actual extraction of critical minerals, and not for the portion of the value chain limited to black mass production.
The incentives under the scheme will include a 20 per cent capital expenditure (Capex) subsidy on plant and machinery, equipment, and associated utilities for units starting production within a specified timeframe. If production starts beyond the given timeframe, a reduced subsidy will apply.
Additionally, an operational expenditure (Opex) subsidy will be provided as an incentive on incremental sales over the base year (FY 2025–26). Approximately 40 per cent of the eligible Opex subsidy will be disbursed in the second year, and the remaining 60% in the fifth year, from FY 2026–27 to FY 2030–31, subject to meeting specified incremental sales thresholds.
To ensure broader participation, the total incentive (Capex plus Opex) per entity will be capped at Rs 50 crore for large entities and Rs 25 crore for small entities. Within this cap, the Opex subsidy will be limited to Rs 10 crore and Rs 5 crore, respectively.
“Several rounds of consultations with industry and other stakeholders have been held through dedicated meetings, seminar sessions, etc., before formulating the scheme,” said the government.