India’s Union Budget 2026–27 announced the creation of Rare Earth Corridors in the mineral-rich states of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to promote mining, processing, research, and manufacturing of rare earth minerals. These minerals contain economically valuable rare earth elements (REEs), which are moderately abundant but not sufficiently concentrated to be economically exploitable.
The corridor strategy is timely, given the expanding use of REEs across consumer electronics, renewable energy systems, and advanced defence equipment. It extends beyond mining to include midstream processing of mineral ores into individual rare-earth oxides and upstream manufacturing of these oxides into metals and permanent magnets, stages where India’s capabilities remain underdeveloped. However, it misses the opportunity to place equal emphasis on recovering rare earths from end-of-life (EoL) products through recycling.
Examining India’s policy landscape for rare earth recycling reveals the need for a shift from piecemeal recognition to a well-coordinated, integrated policy architecture capable of enabling scale.
Rare earth recycling refers to the process of recovering and reprocessing REEs from EoL products and reintroducing them into the supply chain. This approach is not only important from a socio-ecological perspective but also necessary to reduce India’s worrisome import dependence. Examining India’s policy landscape for rare earth recycling reveals the need for a shift from piecemeal recognition to a well-coordinated, integrated policy architecture capable of enabling scale.
The policy landscape can be grouped into the following three broad categories, which also frame the core case for scaling recycling in India:
REEs are primarily used to manufacture rare earth permanent magnets (REPMs), enhancing their performance, making them roughly ten times more powerful than conventional magnets. Given their high magnetic strength and stability, REPMs are widely employed in sectors such as defence, renewable energy, and industrial electronics. Furthermore, the growing consumption of REPMs, expected to double by 2030, driven by net-zero imperatives, underscores the urgent need to scale domestic REPM manufacturing capacity. The Takshashila Institution estimates that recycling alone could meet more than 35 percent of India’s baseline REPM demand.
A stronger push for recycling is also essential to reduce India’s import dependence. Although India holds the world’s third-largest REE reserves, it imports 80–90 percent of its REPMs and related raw materials from China, with imports reaching US$ 221 million in 2025. This overdependence became evident when China imposed export restrictions in 2023 on technologies used for the extraction and separation of REEs, and more recently in 2025 on certain REE products, triggering supply disruptions for Indian automotive and electronics manufacturers.
The Takshashila Institution estimates that recycling alone could meet more than 35 percent of India’s baseline REPM demand.
Aiming to strengthen self-reliance, India allocated INR 7,280 crore to the REPM Manufacturing Scheme, 2025, intending to develop 6,000 MTPA of integrated REPM manufacturing capacity. While the scheme supports the creation of integrated REPM facilities, involving conversion of rare earth oxides (REOs) to REPMs, it does not address recycling. The Ministry of Electronics and Information Technology (MeitY) has recommended that the Ministry of Heavy Industries integrate measures to encourage the recycling of spent magnets to strengthen resource security.
On the other hand, the National Critical Mineral Mission (NCMM) (2025) emphasises recycling of EoL products, alongside exploration and processing. Under this mission, a six-year INR 1,500 crore incentive scheme has been approved to enhance critical mineral recycling capacity, including rare earth elements (REEs), from waste materials, with one-third of funding earmarked for new and small recyclers. However, the scheme’s low investment ceilings have drawn criticism for diluting its impact and reducing it to a largely symbolic intervention.
To unlock meaningful scale in a capital-intensive and technologically challenging segment, these incentives must be strengthened to attract private participation. Industry interest is already emerging, with companies such as Attero committing to invest INR 100 crore to scale rare earth permanent magnet (REPM) recycling in India, and BatX Energies partnering with Germany’s Rocklink GmbH to develop a sustainable magnet recycling system. A more robust incentive framework could convert this rising momentum into a competitive domestic recycling ecosystem.
India is the world’s third-largest generator of electronic waste (e-waste), with volumes expanding by roughly 30 per cent annually, and therefore presents a strong case for scaling the recycling segment. The accelerating energy transition is expected to drive the generation of REPM-rich waste, mainly due to the increase in electric vehicles (EVs), each containing approximately 1.5 kilograms of REPMs.
Additionally, the recycling of REPMs offers greater efficiency gains and contributes more to supply security compared to ore mining. In light of persistent market volatility and raw material availability constraints, EoL REPMs are increasingly classified as a credible secondary resource. These factors make a well-defined regulatory framework governing e-waste and electric vehicle (EV) components critical to advancing rare earth recycling.
In light of persistent market volatility and raw material availability constraints, EoL REPMs are increasingly classified as a credible secondary resource.
In India, the E-Waste Management Rules (2022) govern the recovery of materials from e-waste to meet Extended Producer Responsibility (EPR) obligations and define a ‘recycler’ as an entity engaged in the recovery of precious and semi-precious metals, including rare earth elements (REEs). The rules incentivised recyclers primarily based on the total volume of waste processed and were recently reformed to enable the issuance of EPR certificates for specific valuable metals such as gold and copper. However, REEs remain excluded, with the policy stating that they will be “considered and incentivised” in the future.
Similarly, the Environment Protection (End-of-Life Vehicles) Rules (2025) mandate that scrapping facilities dismantle and recover materials from specific components, including EV magnets, which are primary sources of REEs. However, the rules currently generate EPR certificates solely on the basis of the weight of steel scrap produced. Integrating REE recovery targets and value-based credits into the EPR framework is necessary to support the recycling of strategically critical minerals, including REEs.
By recovering rare earths from end-of-life (EoL) products, recycling not only addresses India’s mounting e-waste challenge but also mitigates the ecological degradation associated with new mining activities. Estimates indicate that producing a single tonne of rare earth oxide can generate up to 2,000 tonnes of toxic waste. Following the Rare Earth Permanent Magnet (REPM) Manufacturing Scheme and the Rare Earth Corridor initiative, the government-owned Indian Rare Earths Limited (IREL) is preparing for a 400 percent expansion of its mining capacity over the next decade, with a focus on coastal states such as Tamil Nadu and Kerala.
While this development marks a significant advancement for the rare earth sector, it raises serious concerns for local communities that bear the brunt of mining activities. Environmentalists and fishermen’s associations have protested against Indian Rare Earths Limited (IREL) operations, citing long-term ecological and public health risks arising from high levels of natural background radiation, disruption of sand dunes and biodiversity, and severe water contamination. In contrast, recycling presents a markedly cleaner and more resource-efficient alternative.
Building on the objectives of the National Mineral Policy (2019), which underscores the need to strengthen efforts towards the recovery of metals through recycling for the conservation of natural resources, the proposed Mines and Minerals (Development and Regulation) Amendment Act (2025) introduces several provisions aimed at creating an enabling environment for recycling. For instance, Section 8A has been amended to permit the sale of previously discarded dumps stacked within a leased area, thereby enabling their commercial utilisation. Additionally, Section 15B allows a leaseholder to apply for the inclusion of any other mineral found within the lease area, preventing the loss of secondary minerals that might otherwise have been treated as waste.
What is required is a comprehensive framework to enable scale and mainstream recycling within India’s broader mineral security strategy, rather than treating it as a peripheral environmental objective.
The 2025 Policy for Exploration and Recovery of Critical Minerals represents an important step towards a more comprehensive framework. It proposes the creation of a centralised Geographic Information System (GIS)-linked inventory to catalogue critical minerals, including rare earth elements (REEs), found in secondary sources such as mine dumps and tailing ponds. The policy requires all exploration agencies to follow the Geological Survey of India’s (GSI) Standard Operating Procedure of Mineral Exploration to ensure accurate and standardised data reporting. Furthermore, it incorporates specific protocols for the systematic identification of REEs during coal and lignite exploration, with the aim of unlocking strategic resources and pre-emptively mitigating mineral losses to waste streams.
These measures constitute a notable step towards enabling recycling from mine waste. Future policy efforts must build on this foundation to operationalise the catalogued mineral database effectively and fully leverage the reduced procedural barriers.
Rare earth recycling is positioned at the intersection of mining policy, critical minerals strategy, and waste management, each governed by different ministries and regulatory frameworks. Therefore, scaling this sector requires a coordinated and integrated policy architecture comprising targeted incentives and risk-sharing mechanisms to attract private participation, while also encouraging international cooperation and technology transfers.
Such policy coherence is particularly important because, despite its immense potential to reduce import dependence and environmental harm, rare earth recycling remains constrained by technical complexity, characterised by the need for advanced sorting, component separation, and chemical processing technologies. While several initiatives, such as IIT Kharagpur’s pilot project on the selective recovery of REEs from spent magnets, represent important steps towards improving technical and economic feasibility, pilot-scale innovation alone cannot create a viable recycling ecosystem. What is required is a comprehensive framework to enable scale and mainstream recycling within India’s broader mineral security strategy, rather than treating it as a peripheral environmental objective. By embedding recycling targets, dedicated financing mechanisms, and inter-ministerial coordination into recycling policy, India can transition from fragmented initiatives to a resilient, circular rare earth value chain.
Pranita Gupta is a Research Intern at Observer Research Foundation.
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