L&T Eyes Rare-Earth Magnet Manufacturing in India as Supply Chain Push Accelerates

Larsen & Toubro is preparing to enter India’s rare-earth permanent magnet industry. The move could strengthen domestic supply chains in several strategic sectors.

L&T plans to bid under the Government of India’s ₹7,280 crore incentive programme for rare-earth permanent magnets.

The programme aims to build domestic manufacturing capacity and reduce India’s dependence on imported magnets.

Rare-Earth Magnets Become a Strategic Priority

Rare-earth permanent magnets play a critical role in modern industrial equipment.

Manufacturers use them in electric vehicle motors, wind turbines, industrial robots and electronic products. They also support several advanced manufacturing applications.

China currently accounts for around 90% of global rare-earth magnet production, according to the source.

This concentration creates supply-chain risks for countries that depend heavily on imports. India has therefore started building domestic capabilities in this strategic sector.

L&T’s potential entry could add a major Indian engineering company to that effort.

L&T Preparing Bid Under ₹7,280 Crore Scheme

L&T plans to participate in the government incentive programme for domestic magnet production.

However, the company will need access to specialised manufacturing technology. High-performance rare-earth magnets require precise engineering and advanced production processes.

L&T is therefore expected to identify a technology partner with expertise in high-precision magnet manufacturing.

The government programme has already attracted 15 bids, according to the report.

One of the participants includes a consortium involving Japan-based Proterial Ltd. and two Indian automobile manufacturers.

The number of bids indicates growing industrial interest in building a domestic rare-earth magnet ecosystem.

Rare-Earth Magnets Could Support L&T’s EV Plans

The proposed investment could also complement L&T’s expansion into electric mobility technologies.

The company is developing next-generation electric vehicle traction motors in India.

L&T has partnered with Israel-based EVR Motors for its electric motor initiative.

Rare-earth permanent magnets form an important component in many high-performance electric motors. Domestic magnet production could therefore create a strategic link with L&T’s EV motor ambitions.

Such integration could help the company develop a broader supply chain around electric mobility technologies.

Beyond L&T’s Traditional Engineering Businesses

Rare-earth magnet manufacturing would also represent a significant diversification for L&T.

The company has traditionally built its strength around construction, heavy engineering and large industrial projects.

Advanced materials and electric mobility could open another technology-driven growth area.

L&T already possesses expertise in complex engineering and large-scale industrial manufacturing. Magnet production could extend those capabilities into a strategically important materials segment.

Why India Wants Domestic Magnet Production

India’s growing electric vehicle and renewable energy industries will require increasing volumes of high-performance magnets.

Wind turbines use permanent magnets in several generator designs. Electric vehicles rely on them in many traction motor systems.

Industrial automation, robotics and advanced electronics also require specialised magnets.

Dependence on a concentrated overseas supply chain could therefore affect several industries at the same time.

Domestic production would not remove every supply-chain challenge. India would still need reliable access to rare-earth materials, processing technology and advanced manufacturing expertise.

However, local magnet production could reduce vulnerability at an important stage of the value chain.

Building a Wider Critical-Materials Ecosystem

The proposed L&T investment reflects a larger shift in India’s industrial strategy.

The country is seeking stronger domestic capabilities in critical minerals, advanced materials and key manufacturing components.

Rare-earth magnets sit at the intersection of several priority sectors. These include electric mobility, renewable energy, industrial automation and advanced electronics.

Building manufacturing capacity in India could also create opportunities for technology partnerships and specialised engineering.

L&T’s potential entry would bring the scale and engineering experience of one of India’s largest industrial groups into this emerging sector.

If the company proceeds with its investment, the project could support both its electric mobility ambitions and India’s broader effort to build a more resilient industrial supply chain.

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Source: India Brand Equity Foundation (IBEF), citing The Economic Times, August 12, 2026.

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