L&T Preps Bid For India's ₹7,280 Cr Rare-Earth Magnet Incentive Scheme

Larsen & Toubro is preparing to enter rare-earth magnet manufacturing in India, joining the government's broader push to cut import dependence and loosen China's grip over the critical industrial component, according to a Bloomberg report.

The engineering conglomerate is readying a bid for the government's ₹7,280 crore ($764 million) incentive scheme for rare-earth magnet production, the report said. L&T will need to secure a technology partner with specialised expertise to enter the sector, which is known for high-precision engineering, it added. The incentive programme has drawn 15 bids so far, including one from a consortium comprising Japan's Proterial and two Indian automakers.

Diversification Beyond Core Business

The move would mark a diversification for India's largest infrastructure company, which has traditionally focused on construction, heavy engineering and industrial projects. The plan also dovetails with L&T's proposed investment in electric vehicle motors, which rely on rare-earth permanent magnets for their functioning.

L&T's potential entry into the sector aligns with the government's initiative to build a domestic supply chain, after China, which controls 90% of global output, restricted exports of the component in April last year. Apart from EV motors, rare-earth magnets are used in wind turbines, industrial robots and a range of electronic devices.

Last year, the government approved a seven-year programme comprising ₹6,450 crore in sales-linked incentives and ₹750 crore in capital subsidies to boost domestic magnet production. India aims to build annual domestic capacity of 6,000 metric tonnes, with support extended to about five companies. The government expects the incentives to encourage both domestic firms and overseas magnet makers to set up local production, reducing dependence on Chinese suppliers, which have benefited from state support and economies of scale over the years.

L&T's bid to manufacture rare-earth magnets would also support its own plan to build next-generation electric vehicle traction motors locally. The company has partnered with Israel-based EVR Motors for this initiative, it said during its earnings call last month.

Its EPS Mobility unit has secured its maiden commercial order to supply 500,000 such motors to a two-wheeler manufacturer over three years, L&T said, without disclosing the client's identity.