Incentive scheme on the cards for critical mineral recycling: G Kishan Reddy
The Ministry of Coal and Mines indicated that an incentive scheme for critical mineral recycling is being developed, alongside plans to fast-track reforms sought by the material recycling industry.
The government said it would take up industry demands, including adoption of innovative recycling technologies and environmental sustainability practices, through an inter-ministerial process involving the Finance, Commerce and Mines ministries.
Industry representatives sought withdrawal of the Pre-Shipment Inspection Certificate (PSIC) requirement for metal scrap imports, which they said has disrupted operations, along with removal of the Basic Customs Duty on aluminium scrap.
The discussion took place at a seminar organised by the recycling industry body on India's critical mineral recycling ecosystem.
Pre-Shipment Inspection Certificate (PSIC) and Import Regulation
A Pre-Shipment Inspection Certificate is a compliance document issued by a Pre-Shipment Inspection Agency (PSIA) — an inspection body registered and approved by India's Directorate General of Foreign Trade (DGFT) — certifying that goods, most commonly metallic waste and scrap, are inspected and tested at the port of loading before shipment to India. It is a non-tariff regulatory tool used to screen imports for radioactive contamination, hazardous waste and misdeclaration, rather than a customs duty.
Key Details
- DGFT operates under the Foreign Trade (Development and Regulation) Act, 1992, and issues periodic notifications governing import policy conditions, including PSIC requirements for scrap categories.
- PSIC requirements for metal scrap are distinct from the Non-Ferrous Metal Import Monitoring System (NFMIMS), a separate DGFT registration mechanism (modelled on the Steel Import Monitoring System) that tracks non-ferrous metal imports, including aluminium and copper scrap under HS Chapter 74-81.
- Industry criticism of PSIC procedures centres on inspection delays and cost at load ports, which recyclers argue raise input costs for scrap-dependent secondary metal production.
The demand to scrap the PSIC requirement reflects a tension UPSC often tests — the trade-off between import-quality/security screening (non-tariff regulation) and ease-of-doing-business for input-dependent manufacturing sectors like secondary metal recycling.
Customs Duty Structure on Scrap Imports and the Circular Economy
India currently levies a Basic Customs Duty (BCD) of 2.5% on aluminium scrap, even though scrap-based ("secondary") metal production consumes substantially less energy than primary ore-based smelting, making scrap a lower-carbon feedstock. Lower or zero duty on scrap inputs is a policy lever to support both import substitution of virgin ore processing and India's broader circular economy goals.
Key Details
- India imports roughly 1.6-1.8 million tonnes of aluminium scrap annually, largely from Europe, the US and the UK, feeding secondary aluminium producers that require far less energy than primary (bauxite-to-alumina-to-aluminium) production.
- The Ministry of Environment, Forest and Climate Change's Battery Waste Management Rules (2022) and E-Waste (Management) Rules (2022) operate under an Extended Producer Responsibility (EPR) framework that separately mandates domestic recovery of metals from end-of-life batteries and electronics — the recycling ecosystem this scheme extends to imported scrap as well.
- Government panels have previously examined scrapping the 2.5% duty on aluminium scrap to support the domestic recycling industry's cost competitiveness.
The industry's demand to remove the BCD on aluminium scrap, alongside the proposed new incentive scheme, signals a policy shift toward treating metal scrap as strategic secondary-source feedstock rather than a standard dutiable import — central to India's circular economy and resource-security objectives.
India's Existing Critical Mineral Recycling Incentive Scheme (context)
India already operates a dedicated Incentive Scheme for Promotion of Critical Mineral Recycling under the National Critical Mineral Mission (NCMM), approved by the Union Cabinet with an outlay of Rs 1,500 crore for FY2025-26 to FY2030-31, offering capital and operational expenditure subsidies for recovering critical minerals (lithium, cobalt, nickel, rare earths) from battery and e-waste streams.
Key Details
- That scheme targets lithium-ion battery scrap and e-waste specifically, whereas the newly discussed scheme responds to the broader base-metal and ferrous/non-ferrous scrap recycling industry (aluminium, copper, cupro-nickel alloys), represented through industry bodies rather than battery-chemical recyclers alone.
- The NCMM overall carries a total outlay of about Rs 34,300 crore over seven years (2024-25 to 2030-31), covering exploration, processing and recycling pillars.
- India formally notified a list of 30 critical minerals in 2023, of which 24 were inserted into Part D of Schedule I of the Mines and Minerals (Development and Regulation) Act, 1957, enabling central government auctioning of exploration/mining blocks for these minerals.
The scheme now "on the cards" would sit alongside the existing battery/e-waste recycling incentive scheme, extending India's recycling-incentive architecture to the wider metal-scrap trade that feeds industrial and construction-sector demand for aluminium and copper.
- Existing NCMM recycling incentive scheme outlay: Rs 1,500 crore (FY2025-26 to FY2030-31); overall NCMM outlay: about Rs 34,300 crore over seven years.
- Current Basic Customs Duty on aluminium scrap: 2.5%.
- India's annual aluminium scrap imports: approximately 1.6-1.8 million tonnes, chiefly from Europe, the US and the UK.
- India's notified critical minerals list: 30 minerals (2023); 24 inserted into MMDR Act Schedule I, Part D.
- PSIC is issued by DGFT-approved Pre-Shipment Inspection Agencies at the port of loading, distinct from the Non-Ferrous Metal Import Monitoring System (NFMIMS) registration requirement.