By Grace Kim

India's lithium-ion battery recycling sector can process more than 60,000 tonnes of spent cells each year, generating roughly 30,000 tonnes of black mass, the dark, graphite-rich powder that sits between scrap yards and the country's mineral refining ambitions. That material stream has become a national policy fault line.

At a Ministry of Mines seminar last week, officials confronted the gap between India's growing recycling throughput and its still-thin domestic refining base. The country depends on imports for most of its critical mineral supply. China alone supplied more than 85 percent of India's permanent magnet imports by quantity between fiscal years 2023 and 2025. With Beijing tightening exports of rare earths and lithium-ion battery technologies, New Delhi now treats battery scrap as a strategic domestic resource.

Why is black mass leaving India?

The government temporarily banned black mass exports last year to retain feedstock for domestic refiners. Yet shipments continued under incorrect customs codes, according to reporting from The Indian Express and EV Reporter. The mineral-rich powder, which makes up 40 to 50 percent of an EV battery's weight, still travels abroad.

Foreign buyers, principally Chinese and South Korean refiners, operate at greater scale than Indian peers and often settle payments faster at higher prices. Indian shredders calculate the regulatory risk against a better offer abroad.

The math leaves domestic refiners short. Rubamin in Gujarat and Attero in Uttar Pradesh, both named in industry coverage as critical mineral processors, must import higher-priced feedstock to keep plants running, then sell into a constrained domestic market. India exports a powder and imports the refined equivalent back, at higher cost.

What is the ₹1,500 crore scheme supposed to fix?

New Delhi rolled out a ₹1,500 crore incentive programme running through fiscal year 2031 to push critical mineral recovery from secondary sources. Eligible plants receive a 20 percent capital expenditure subsidy on plant and machinery, plus operating expenditure incentives tied to additional sales. Smaller companies can draw about ₹25 crore; larger entities up to ₹50 crore.

The catch: only facilities that extract critical minerals qualify. Plants that stop at black mass production receive nothing.

That distinction is the policy lever. Officials want shredders to sell powder to Indian refiners, not to foreign smelters. The Ministry of Mines framed the ban and the subsidy together as a single push to build a circular battery value chain inside the country.

What happens next?

Two milestones will decide whether the scheme changes the calculation. Customs, the Directorate General of Foreign Trade, and the Central Pollution Control Board must agree on a single definition and customs classification for LIB black mass, so mislabelled shipments cannot slip past inspectors. The Ministry of Mines has also signalled a forthcoming "very substantial" scheme to promote domestic processing of lithium and nickel. Details remain undisclosed.

Downstream demand offers its own constraint. From fiscal year 2028, battery makers must incorporate 5 percent recycled material in EV cells, rising to 20 percent by fiscal year 2031. India's cell manufacturing capacity stood at roughly 1 gigawatt-hour at the end of 2025, with about 75 percent of EV cells imported from China. The country reported no battery-grade cathode producers as of 2025.

So even refined minerals recovered at home may have to leave again until domestic gigafactories come online. India set a target of 500 gigawatts of non-fossil fuel capacity and 50 percent renewable electricity by 2030. Closing the loop on black mass sits inside that timetable, and inside a customs code rewrite the government has not yet published.