India is setting the stage for a major leap in sustainable energy with plans to launch incentives for recycling 24 critical minerals, including lithium and cobalt, which are essential for the country's energy security and green transition. The move is part of a larger strategic roadmap to achieve net-zero greenhouse gas emissions by 2070, and it ties in closely with India’s electric vehicle (EV) growth ambitions.

Why Recycling Critical Minerals Matters

Critical minerals such as lithium, cobalt, nickel, and rare earth elements are the backbone of energy storage, electric vehicles, and renewable power systems. India’s dependency on imports for these minerals has raised concerns over long-term supply security, especially amid rising global competition. The government’s response is a robust, future-focused recycling policy aimed at reducing import reliance and building domestic capacity.

The Ministry of Mines is expected to unveil a ₹1,500 crore (US$ 174.07 million) incentive programme this year dedicated to recycling critical minerals, with a special focus on lithium-ion batteries. This is part of a broader allocation of ₹16,300 crore (US$ 1.89 billion) to build a complete value chain for critical mineral production, processing, and recycling in India.

Incentive Framework in the Making

Sources familiar with the policy formulation have revealed that the proposed recycling incentives could include capital expenditure (CapEx) subsidies or production-linked incentives (PLI)—a model successfully applied in India’s electronics and semiconductor sectors.

These funds are expected to be disbursed over four to five years, with the aim of building infrastructure capable of recycling up to 75,000 metric tonnes of lithium-ion batteries annually. That figure is nearly double the current recycling capacity in the country, indicating the government’s ambition to establish India as a leader in green manufacturing.

Supportive Tariff Measures

As a further step, the government removed customs duties in February 2025 on the import of scrap and waste related to lithium, cobalt powder, zinc, lead, and used lithium-ion batteries. This move is expected to make raw material sourcing cheaper for recycling companies, while also promoting a circular economy approach.

By eliminating barriers to raw material access, the government is enabling domestic recyclers to scale faster, reduce production costs, and compete with global counterparts.

Role in Electric Vehicle Ecosystem

India’s EV market is at an inflection point. In 2024, EVs constituted 2.5% of the total 4.3 million car sales, but the growth rate in the EV segment stood at 20%, far outpacing the overall market’s growth of just 5%.

With analysts predicting EV sales to double to 2,00,000 units in 2025, the demand for lithium-ion batteries and associated minerals will skyrocket. Hence, the recycling ecosystem becomes crucial to meet the growing domestic demand sustainably.

Enhancing India’s Global Competitiveness

The emphasis on recycling also reflects India’s intent to secure its place in the global supply chain for green technologies. Nations worldwide are racing to lock in supplies of critical minerals due to their strategic importance, especially in light of geopolitical uncertainties.

By developing in-house capabilities for recycling and mineral processing, India is reducing its vulnerability to supply shocks and enhancing its economic resilience.

Focus Areas for Development

The government is particularly focusing on the following areas:

• Development of urban mining infrastructure: Establishing collection centres and reverse logistics for spent batteries and electronic waste.

• Investment in R&D: Encouraging the development of eco-friendly and high-yield recycling technologies.

• Partnerships with private players: Promoting public-private collaborations to scale up recycling operations through financial and technical support.

Strategic Minerals Identified

Among the 24 critical minerals India aims to recycle are:

• Lithium

• Cobalt

• Nickel

• Graphite

• Rare Earth Elements (REEs) such as Neodymium and Dysprosium

These minerals are crucial for the clean tech revolution, with applications in solar panels, wind turbines, and especially EV batteries.

Path to Net Zero

India’s commitment to net-zero emissions by 2070 includes milestones such as achieving 500 GW of non-fossil fuel power capacity by 2030, and meeting 50% of energy needs from renewables.

To support this journey, building a domestic ecosystem for green energy inputs like critical minerals is essential. The recycling initiative, therefore, aligns directly with India’s climate commitments under the Paris Agreement.

Global Context

Countries like the US, EU, and China have already recognised the importance of recycling in their critical minerals policies. India’s entry into this space, backed by a structured incentive mechanism, signals a serious intent to be a global player in sustainable energy.

By focusing on both economic and environmental sustainability, the new recycling policy is expected to:

• Create jobs

• Promote innovation

• Reduce environmental degradation from traditional mining

• Make India a preferred destination for green manufacturing

Final Thoughts

India’s upcoming incentive scheme for critical mineral recycling represents a paradigm shift in resource management and green industrial policy. By targeting materials like lithium and cobalt, the government is directly addressing the core challenges of the EV and renewable energy sectors.

With a well-funded, structured, and forward-looking policy, India is poised to lead the way in building a circular economy for critical resources, supporting its climate goals, industrial ambitions, and global competitiveness.

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