Prime Minister Narendra Modi-led Union cabinet has approved a ₹1,500 crore incentive scheme to develop recycling capacity in India for the separation and production of critical minerals from secondary sources, the mine ministry announced on Wednesday.

This is part of the Centre’s National Critical Mineral Mission (NCMM,) aimed at building capacity of critical minerals, including the rare earth magnets within India to ensure supply chain resilience amid global headwinds.

While from exploration, auction, mine development, to acquisition of overseas assets, critical mineral value chain requires a long gestation period before the supply begins for Indian manufacturers, for immediate resolution of the shortage, with the scheme, the government is focusing on recycling secondary sources.

With the current outlay, the Centre aims to establish over 270 kilotonnes of annual recycling capacity, yielding around 40 kilotonnes of critical minerals each year.

“The Scheme will provide incentive for the recycling value chain which is involved in actual extraction of critical minerals, and not the value chain involved in only black mass production,” the government said in a statement.

This announcement comes just a day after PM Modi talked about the central government’s push for this mission at the Semicon India 2025.

The scheme is set to have a six-year tenure from this financial year and go on until FY 2030-31. The scheme is expected to attract investments of about ₹8,000 crore and generate nearly 70,000 direct and indirect jobs.

The eligible secondary sources that can be recycled under the scheme include e-waste, Lithium Ion Battery (LIB) scrap, and scrap other than e-waste & LIB scrap including catalytic convertors in end-of-life vehicles.

A third of the scheme’s outlay (i.e. ₹500 crore) will be earmarked for small and new recyclers including startups. Additionally, beneficiaries will include large, established recyclers.

Under the scheme, funds will be deployed in establishing new units and expansion or modernisation or diversification of existing capacity units.

Under the scheme, a 20% of capital expenditure subsidy on ‘plant and machinery, equipment and associated utilities’ will be provided to recyclers for starting production within specified timeframe. If it takes longer, a reduced subsidy will applicable. Then another operating expenditure subsidy will be provided based on incremental sales over the base year that is the current fiscal year. Over 40% of the eligible operating subsidy will be given out in the second year itself, followed by the remaining subsidy paid up in the fifth year, provided a pre-decided incremental sales have been achieved.

An overall ceiling of ₹50 crore is pegged per large entity, and ₹25 crore per small entity, within which the ceiling for opex subsidy is ₹10 crore and ₹5 crore respectively. The Centre has not given clarity on the definition of large and small entities under this scheme.