The Union Cabinet’s approval of a ₹1,500 crore incentive scheme to build recycling capacity for critical minerals marks a forward-looking and well-timed intervention in India’s resource security strategy.

About Critical Minerals

• Importance of Critical Minerals: Critical minerals are essential “vitamins” for modern industries, crucial for economic development and national security.
• Applications in Key Industries: They are indispensable in electric vehicle batteries (lithium, cobalt, nickel), smartphones (rare earth elements), fighter jets, semiconductors, and clean energy technologies.
• India’s Focus on Critical Minerals: India has identified 30 critical minerals, often referred to as the “new oil” of the 21st century.
• Geopolitical Significance: Peter Zeihan’s Quote: “The geography of resources will define the geography of power in this century,” emphasizes that control over these resources translates to global power.

Import Dependence and China’s Control

• India’s Dependence on Imports: India is heavily dependent on imports for critical minerals.
• China’s Dominance in Rare Earth Elements: China controls 80-90% of the processing of rare earth elements globally, posing a significant geopolitical risk.
• Implications of Dependency: This dependency leads to high import costs and vulnerability to supply disruptions, which could cripple industries and defense manufacturing, threatening national security.

Significance of Recycling

• Long Gestation Period for Mining: India’s exploration of new minerals domestically involves a long gestation period, taking years before critical minerals can be refined and produced.
• Advantages of Recycling: Recycling offers a quicker method of obtaining these minerals, providing a more sustainable and immediate alternative.
  • Challenges in Mining vs. Recycling: Setting up mines takes years to yield usable output, while recycling provides a more efficient pathway for supply chain implementation and addresses the growing issues of electronic and battery waste.

Government’s Multi-pronged Strategy for Self-Independence

• Recycling Scheme (Part of National Critical Mineral Mission):
  • A ₹1500 crore incentive scheme launched for critical mineral recycling, spanning from 2025-26 to 2030-31.
  • Focuses on urban mining, extracting critical minerals from e-waste (old phones, laptops), battery scrap (EVs, lithium-ion batteries), and catalytic converters.
  • This scheme promotes a circular economy by encouraging reuse and recycling, simultaneously addressing mineral scarcity and e-waste disposal.
  • Types of Incentives: 
    • Capital Expenditure (CAPEX) Subsidy: The government offers a 20% subsidy for establishing new recycling plants and purchasing machinery.
    • Operating Expense (OPEX) Incentives: Similar to a Production-Linked Incentive (PLI) scheme, incentives are provided for running the plant and are linked to the production of critical minerals.
    • Support for Small Players: One-third of the ₹1500 crore scheme is reserved for small players and startups, fostering innovation and preventing market monopolies
    • Expected Benefits: Annually, it aims to create 270 kilotons of recycling capacity, yield 40 kilotons of critical minerals, attract ₹8000 crore in private investment, and create about 70,000 direct and indirect jobs.
• Domestic Exploration: India is actively exploring for critical minerals within its own territory, with mineral blocks being auctioned in states like Andhra Pradesh, Rajasthan, and Jharkhand.
  • Significant lithium reserves have also been found in Jammu & Kashmir.
• Acquiring Assets Abroad:
  • A special company, KABIL (Khanij Bidesh India Limited), has been established.
  • KABIL’s mandate is to acquire mineral assets (e.g., lithium blocks) in other countries like Argentina and African nations, to diversify supply chains and reduce dependence on any single country.

Challenges in Achieving Self-Independence

• Environmental Risks of Recycling: Recycling, if not done properly, can increase pollution, necessitating environmentally friendly practices.
• R&D Investment: Continuous investment in Research and Development (R&D) is crucial to ensure efficient and globally competitive recycling processes, especially as battery chemistry evolves.
• Coordination: Success requires strong coordination among the Central Government, State Governments, industries, and research institutions.

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