India's ₹1,500 crore recycling scheme: who it pays, and why black mass alone doesn't qualify.

On 3 September 2025 the Union Cabinet approved a ₹1,500 crore incentive scheme “to develop recycling capacity in the country for the separation and production of critical minerals from secondary sources.” It is part of the National Critical Mineral Mission, which the Cabinet approved in January 2025 with an expenditure of ₹16,300 crore and expected investment of ₹18,000 crore by public sector undertakings.

For anyone in the lithium-ion battery chain, the scheme matters less for its size than for what it chooses to pay for. This piece explains who qualifies, what it pays and what has happened since, from the Cabinet release, the Gazette notification and the scheme guidelines. It's our reading as a battery collector, not advice on applying.

What does the scheme fund?

Recycling capacity that recovers critical minerals from three kinds of feedstock: e-waste, lithium-ion battery scrap, and other scrap such as catalytic converters from end-of-life vehicles. The Gazette notification defines battery scrap broadly, as “the different advanced chemistry cell (ACC) mixes like LFP, NMC and LCO, etc.”

It covers new plants as well as the expansion, modernisation and diversification of existing ones, and it runs for six financial years, starting with 2025-26. The Ministry of Mines runs it, with Jawaharlal Nehru Aluminium Research Development and Design Centre in Nagpur as the project management agency. A recycler needs authorisation from the Central or State Pollution Control Board to take part.

Why black mass alone doesn't qualify

Black mass is the powder left when battery scrap is shredded: it holds the valuable metals, but it isn't yet lithium, nickel or cobalt anyone can use. The Cabinet was explicit that the scheme pays for “actual extraction of critical minerals, and not the value chain involved in only black mass production.”

The Gazette notification spells out the categories. Collectors and dismantlers (L1), shredders and sorters (L2) and plants that make black mass by mechanical shredding (R2) get nothing. The scheme backs R3 recyclers, which turn black mass into metal salts or metal, and R4 recyclers, which go end to end from battery scrap to metal salts or metal, using hydrometallurgy and newer technologies.

That includes us: a collector is L1, so Optimite Energy is not a beneficiary. Our customers, the recyclers that extract, are.

What does it pay?

Two subsidies. The first is 20% of the capital spent on plant and machinery, equipment and associated utilities, for a plant that starts production on time; the rate steps down to 17% and then 14% the longer production takes to start. Land and buildings don't count. Half is paid when commercial production starts, and the other half as the plant meets capacity-utilisation milestones.

The second is an operating subsidy on incremental sales over the 2025-26 base year: 40% of it after the second year and the remaining 60% after the fifth, each on reaching a threshold of incremental sales.

Beneficiaries fall into two groups by global manufacturing revenue, and one-third of the outlay is earmarked for small and new recyclers, start-ups included. Each entity's total is capped, and the caps apply across group companies under the same owner.

Who has qualified so far?

The Ministry of Mines issued the guidelines on 2 October 2025 and took applications for six months, to 1 April 2026. The project management agency evaluated the proposals, and the scheme's Executive Committee approved 58 entities as eligible: 20 on 30 March 2026 and 38 on 29 April 2026. No company names have been published.

The pledged capacity is well above the government's own expectation, though the pledged investment is lower. The Cabinet expected “at least 270 kilo ton of annual recycling capacity” and about ₹8,000 crore of investment; the eligible companies pledged about 850 KTPA of capacity and about ₹5,000 crore. The next stage, the ministry says, is project execution, when capacity and production are considered for payment. The guidelines also let the ministry invite further applications during the scheme's tenure.

What it means for battery feedstock

An extraction plant is only as good as its supply. At the eligibility stage, applicants have to file raw material sourcing agreements covering at least two years of capacity. A plant that starts from black mass must source it from entities registered under the Battery Waste Management Rules and “furnish documentary evidence to demonstrate such traceability of input material.” Successive Union Budgets have also removed basic customs duty on lithium-ion battery scrap, which makes imported scrap a competing source.

Chemistry matters too. The guidelines set a minimum number of critical minerals to extract: two if the input is only LFP, three for other lithium-ion chemistries. A recycler planning output needs to know what it is receiving, lot by lot.

That is the gap a collector fills: steady, documented, single-chemistry feedstock from registered channels, with a record of where every pack came from. We set out what that looks like in a feedstock specification and the consignment record.