L&T Plans Rare-Earth Magnet Manufacturing In India To Reduce China Dependence

Larsen & Toubro (L&T) is planning to manufacture rare-earth magnets in India as the engineering major seeks to expand into a strategically important sector supported by government incentives, Bloomberg reported.

According to the report, the company is preparing a bid for the government’s ₹7,280 crore incentive programme aimed at developing domestic production of rare-earth permanent magnets.

L&T will need to partner with a technology provider with specialised expertise in high-precision magnet manufacturing before entering the segment.

L&T explores strategic entry into rare-earth magnets

The government’s programme has received 15 applications so far, including a proposal from a consortium involving Japan’s Proterial Ltd and two Indian automobile manufacturers.

L&T’s potential entry marks a diversification beyond its traditional businesses, including infrastructure development, construction, heavy engineering and industrial projects. The move also supports the company’s broader plans in electric vehicle technology, where rare-earth magnets are essential components of traction motors.

Rare-earth permanent magnets are used across industries such as electric vehicles, wind energy, industrial robotics and electronics. China currently dominates global production, accounting for around 90% of output. Beijing’s restrictions on exports of these critical materials have encouraged countries, including India, to build alternative supply chains.

Govt pushes domestic critical mineral ecosystem

To boost local manufacturing, the government introduced a seven-year incentive programme with ₹6,450 crore allocated through sales-linked incentives and ₹750 crore through capital subsidies. The initiative aims to create domestic production capacity of 6,000 metric tonnes annually and support around five manufacturers.

The government expects the scheme to attract both Indian companies and international producers, helping reduce reliance on Chinese suppliers that have benefited from government support and large-scale manufacturing advantages.

L&T’s rare-earth magnet plans are closely linked to its electric vehicle motor strategy. The company has partnered with Israel-based EVR Motors to develop next-generation EV traction motors.