Engineering major Larsen & Toubro – L&T is considering producing rare-earth magnets in India as it looks to gain advantages from the government’s drive to cut import reliance and boost local output of the vital industrial component, Bloomberg reported on August 11, 2026, citing a source. The proposed move will diversify L&T besides its core businesses of construction, heavy engineering & industrial projects.
Bloomberg went on to report that the company is planning a bid under the Rs 7,280-crore incentive program by the government for rare-earth permanent magnets. L&T will have to find a technology partner with suitable expertise to enter a sector that requires high-precision engineering.
The people said that the government program has so far attracted 15 bids. One of the bidders is a consortium of Japan’s Proterial and two Indian automakers, said the people, who asked not to be identified because the process is private.
L&T Targets Rare-Earth Magnet Manufacturing
L&T’s potential foray into rare-earth permanent magnets, meanwhile, complements its recommended investment in electric vehicle traction motors. Such motors use rare-earth magnets, so domestic production of the component matters to the broader EV strategy of the company.
The move is part of a wider effort to develop a domestic supply chain for rare-earth magnets and cut dependence on Chinese suppliers. China accounts for some 90% of the world’s output, and its limitations on exports of the critical component have given added impetus to create alternative sources.
Rare-earth permanent magnets are utilized in the motors of electric vehicles, wind turbines, and industrial robots, as well as a range of electronic products. That means their availability matters to industries such as electric mobility, renewable energy as well as advanced manufacturing.
Government advocates for local capacity
In 2025, the government granted approval for a seven-year program to increase production of rare-earth magnets in India. The scheme has sales-linked incentives of Rs 6,450 crore and capital subsidies of Rs 750 crore for manufacturers.
The program aims to create a domestic production capacity of 6,000 metric tonnes per annum. The government intends to support about five companies and wants to draw in local companies and foreign magnet manufacturers to set up production plants in the country.
The objective is to reduce dependence on Chinese suppliers that have benefitted from government assistance and economies of scale. The incentives are intended to spur spending on domestic manufacturing and help build a local supply chain, the government anticipates.
Rare-earth plans match with EV strategy
The plans by L&T for making rare-earth magnets could also aid its push to make next-generation electric vehicle traction motors locally. L&T had confirmed in July 2026 during its earnings call that the company has formed a partnership with EVR Motors, which is an Israel-based firm for the venture.
Its EPS Mobility unit has got its first commercial contract to supply 5 lakh such motors to a two-wheeler maker over a period of three years. Based on the information shared by the company, L&T hasn’t revealed the name of the customer, Bloomberg reported.
The entry made by L&T into rare earth magnets would link its manufacturing plans with the EV motor business. The announcement will also come as India is looking to reduce its dependence on imports of strategically important components and boost its domestic production capacity.
