L&T Eyes Rare-Earth Magnets to Cut China Reliance

Larsen & Toubro (L&T) is reportedly poised to enter India’s rare-earth permanent magnet manufacturing sector. This strategic move aligns with the Indian government’s push to cultivate a domestic supply chain and significantly diminish its reliance on China.

China presently accounts for approximately 90% of global rare-earth production, a concentration that led to challenges for India following export restrictions imposed in April 2025. L&T is preparing a bid for a substantial government incentive program designed to bolster local production.

India’s Strategic Incentive Program

The Indian government has launched a seven-year initiative to foster domestic rare-earth magnet manufacturing. This program aims to attract both Indian and international players, reducing the nation’s dependence on foreign suppliers.

• The total program value is Rs 7,280 crore (equivalent to $764 million).
• It includes Rs 6,450 crore in sales-linked incentives.
• An additional Rs 750 crore is allocated for capital subsidies.
• The goal is to achieve an annual domestic production capacity of 6,000 metric tonnes.
• The program anticipates supporting approximately five companies in this sector.

Key Numbers for L&T’s Venture

• Government incentive program value: Rs 7,280 crore
• China’s global rare-earth production share: 90%
• Annual domestic production target: 6,000 metric tonnes
• Current bids received for the program: 15

Rare-earth magnets are critical components, essential for modern industries ranging from electric vehicle motors to wind turbines, industrial robots, and various electronic devices. This venture represents a new strategic direction for L&T, closely aligning with its broader focus on electric vehicle components, specifically traction motors that utilize these magnets.

The government’s scheme has already attracted considerable interest, with 15 bids submitted. Notably, a consortium involving Japan’s Proterial Ltd. and two Indian automobile manufacturers is among the contenders. L&T’s participation signals a significant step towards India’s self-reliance in this crucial technological domain.