India is set to formalise a dedicated incentive scheme this year to promote the recycling of 24 identified critical minerals—including lithium, cobalt, and rare earth elements—key to the country’s green energy transition. Two sources familiar with the development confirmed that the government is in advanced stages of drafting the scheme, which will be announced in 2024.
These 24 minerals have been classified as “strategic and critical” by the Indian government, owing to their central role in advancing clean energy technologies, electric mobility, and energy storage systems. The aim is to reduce India’s dependence on imports, secure domestic supply chains, and create a circular economy around these essential materials.
Incentives and Strategic Focus
The proposed incentives are expected to take the form of capital expenditure subsidies or production-linked incentives (PLI), tailored to make recycling projects commercially viable in their early stages. The Centre has already allocated ₹1,500 crore for the recycling segment, part of a larger ₹16,300 crore investment plan to develop the broader critical minerals ecosystem.
According to one source, the ₹1,500 crore budget will be spread over four to five years, targeting the creation of a domestic recycling industry that can match future demand for clean energy infrastructure. The incentives will not only help reduce import dependency but also stimulate private sector interest in building scalable recycling units.
One immediate impact of the scheme could be an increase in India’s capacity to recycle lithium-ion batteries, currently pegged at 75,000 metric tonnes per annum. This is particularly relevant given the rapid expansion of the electric vehicle (EV) sector and energy storage requirements.
Policy Reforms Already Underway
In preparation for this transition, the government in February removed customs duties on the waste and scrap of a dozen critical materials, including lead, zinc, cobalt powder, and used lithium-ion batteries. These measures are intended to improve the availability of raw material for recyclers and attract global players to set up operations in India.
Recycling is seen as a crucial pillar in the country’s clean energy roadmap, given the environmental and economic challenges involved in mining and sourcing raw minerals. By developing domestic recycling capabilities, India also hopes to address growing concerns over supply chain vulnerabilities and material security.
Rising Demand Driven by EV Push
India’s EV market is at an inflection point. While EVs made up just 2.5% of the 4.3 million passenger vehicles sold in 2024, that segment grew by 20%, compared to the overall market’s 5% growth. Analysts project EV sales to double to 200,000 units by 2025, buoyed by fresh model launches, favourable regulations, and rising consumer awareness.
This expansion in EV sales will put significant pressure on lithium-ion battery supply chains, making recycling a necessary complement to new mineral exploration and imports. It also aligns with India’s larger goals under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme and other clean mobility initiatives.
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Building a Circular Economy
The recycling of critical minerals is expected to play a foundational role in India’s journey to net-zero emissions by 2070. Beyond EVs, minerals such as lithium, cobalt, and rare earth elements are essential for solar panels, wind turbines, and advanced manufacturing applications.
With the new recycling scheme, India is also aiming to attract investment from global players looking to tap into one of the world’s fastest-growing clean energy markets. The strategic convergence of incentives, regulatory support, and increasing domestic demand makes India an attractive destination for critical mineral investments.
As the clean energy landscape evolves, the upcoming recycling incentives will not only boost material security but also position India as a responsible and resource-efficient global player in the energy transition era.
