Larsen & Toubro (L&T) is preparing to enter India’s rare-earth permanent magnet manufacturing industry and bid for a share of the government’s ₹7,280-crore incentive scheme, as the country attempts to build a domestic supply chain for a critical component used in electric vehicles, wind turbines, electronics, aerospace and defence.
The engineering conglomerate is considering manufacturing rare-earth magnets in India and is expected to seek a technology partner with the specialised expertise required for high-precision magnet production, according to people familiar with the matter.
L&T’s potential entry would add one of India’s largest engineering companies to a growing group of businesses seeking to participate in the government’s push to reduce dependence on imported rare-earth magnets, particularly from China.
The move is also strategically linked to L&T’s plans to manufacture next-generation electric-vehicle traction motors in India.
L&T prepares bid for ₹7,280-crore rare-earth magnet scheme
L&T is preparing a bid for the government’s ₹7,280-crore Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPM).
The company has not yet secured an allocation under the scheme. Instead, it is preparing to participate in the competitive process.
The government has designed the programme to create 6,000 metric tonnes per annum (MTPA) of integrated rare-earth permanent magnet manufacturing capacity in India. The capacity is expected to be divided among up to five beneficiaries, with each beneficiary eligible for up to 1,200 MTPA.
GOVERNMENT REPM SCHEME
₹7,280 crore
↓
6,000 MTPA capacity
↓
Up to 5 beneficiaries
↓
Up to 1,200 MTPA each
↓
Domestic rare-earth magnet production
The scheme is intended to establish India’s first integrated manufacturing ecosystem covering the value chain from rare-earth oxides to finished permanent magnets.
Why L&T wants to make rare-earth magnets
Rare-earth permanent magnets are essential components in several advanced technologies.
They are particularly important for permanent-magnet electric motors, where their high magnetic strength enables compact and efficient motor designs.
Major applications include:
- Electric vehicle motors
- Wind-turbine generators
- Industrial motors
- Robotics
- Consumer electronics
- Aerospace systems
- Defence equipment
RARE-EARTH MAGNETS
↓
High magnetic strength
↓
Compact + efficient motors
↓
Applications
┌──────┼──────┬──────┐
↓ ↓ ↓ ↓
EVs Wind Robots Defence
India’s government expects demand for rare-earth permanent magnets to increase substantially as electric mobility, renewable energy, electronics and industrial automation expand.
China dominates the global rare-earth magnet supply chain
The biggest strategic reason behind India’s push is China’s dominance of the global rare-earth magnet industry.
China accounts for roughly 90% of global rare-earth magnet output, according to people cited in the report.
That concentration creates a significant supply-chain vulnerability for countries such as India.
GLOBAL REPM SUPPLY
China
~90%
████████████████████████████████████████████
Rest of world
~10%
█████
The risk became more visible after China imposed restrictions affecting exports of critical rare-earth products.
For India, building domestic manufacturing capacity is therefore not simply an industrial-policy objective.
It is also a strategic supply-chain security measure.
India’s ₹7,280-crore scheme explained
The Union Cabinet approved the scheme to establish an integrated domestic REPM manufacturing ecosystem.
The programme has a total financial outlay of ₹7,280 crore and is designed to support 6,000 MTPA of domestic capacity.
The government says the programme will support the entire manufacturing chain:
RARE-EARTH OXIDES
↓
Rare-earth metals
↓
Alloys
↓
Sintered REPM
↓
Finished magnets
This integrated approach is important because simply importing rare-earth materials and assembling magnets locally would not provide the same level of supply-chain independence.
Government wants five manufacturers
The scheme envisages allocating the total 6,000-MTPA capacity among five beneficiaries through competitive bidding.
Each beneficiary can receive up to 1,200 MTPA of capacity.
6,000 MTPA
↓
┌────┬────┬────┬────┬────┐
│ │ │ │ │ │
1,200 1,200 1,200 1,200 1,200
MTPA MTPA MTPA MTPA MTPA
L&T’s participation could therefore potentially place it among a select group of manufacturers building India’s domestic rare-earth magnet capacity.
However, the final beneficiaries will be determined through the government’s bidding process.
L&T needs a technology partner
Rare-earth magnet manufacturing is technically demanding.
L&T is expected to require a technology partner with specialised expertise for its proposed entry into the industry.
That is because producing high-performance sintered magnets involves precise control over materials, alloy composition, processing, sintering and magnetisation.
L&T
Engineering + Manufacturing
+
Technology partner
Specialised REPM know-how
↓
Domestic magnet production
The need for a technology partner highlights the difference between conventional heavy engineering and advanced materials manufacturing.
L&T has extensive engineering capabilities, but high-performance magnet production requires specialised process technology and manufacturing know-how.
L&T’s move fits its EV strategy
The proposed magnet manufacturing business is closely connected to another L&T initiative.
The company is planning to build next-generation electric-vehicle traction motors locally and has partnered with Israel-based EVR Motors for the project.
Rare-earth permanent magnets are an important component of many high-performance EV traction motors.
RARE-EARTH MAGNET
↓
EV TRACTION MOTOR
↓
Electric vehicle
This creates a potential vertical integration opportunity for L&T.
Instead of relying entirely on imported magnets for its future motor business, domestic magnet production could eventually give the company greater control over a critical input.
Why rare-earth magnets matter for EVs
Electric vehicles use electric motors to convert electrical energy into mechanical motion.
Permanent magnets containing rare-earth elements can provide strong magnetic fields while keeping motors relatively compact and efficient.
EV BATTERY
↓
Power electronics
↓
Electric motor
↓
Rare-earth permanent magnets
↓
Mechanical power
↓
Wheels
This is why the availability of high-performance magnets has become increasingly important as countries push toward electric mobility.
Rare-earth magnets are also critical for wind turbines
The opportunity extends beyond electric vehicles.
Permanent magnets can be used in generators for wind turbines.
As India expands renewable-energy capacity, demand for components used in wind generation is also expected to increase.
WIND TURBINE
↓
Generator
↓
Permanent magnets
↓
Electricity
A domestic magnet industry could therefore support both India’s electric-mobility and renewable-energy ambitions.
Electronics and robotics are additional markets
Rare-earth magnets are also used in a wide range of electronics and industrial equipment.
Applications include:
- Speakers
- Hard drives
- Sensors
- Actuators
- Industrial motors
- Robotics
- Medical equipment
- Automation systems
REPM APPLICATIONS
EVs
Wind turbines
Robotics
Electronics
Industrial motors
Aerospace
Defence
This makes rare-earth magnet manufacturing a broader industrial opportunity rather than an EV-only business.
Defence and aerospace add strategic importance
Rare-earth permanent magnets are also used in specialised aerospace and defence systems.
Their combination of high magnetic strength and compact size makes them useful for advanced motors, actuators and other systems.
For India, developing domestic production could therefore reduce exposure to external supply disruptions in strategically important industries.
DOMESTIC REPM
↓
Civilian applications
+
Strategic applications
↓
Higher supply-chain resilience
India’s current dependence on imports
India currently meets most of its rare-earth permanent magnet requirements through imports.
The government wants to change that by establishing domestic manufacturing capability.
CURRENT
Imported materials
↓
Imported magnets
↓
Indian manufacturers
TARGET
Indian rare-earth resources
↓
Domestic processing
↓
Domestic magnets
↓
Indian manufacturers
The policy therefore aims to create a much more complete domestic value chain.
India has the raw materials, but processing is the challenge
India has significant rare-earth resources, but having access to ore or rare-earth-bearing minerals is not the same as having a complete magnet manufacturing ecosystem.
The value chain requires several stages:
- Mining
- Separation
- Rare-earth oxide production
- Metal production
- Alloy production
- Magnet manufacturing
MINING
↓
SEPARATION
↓
OXIDES
↓
METALS
↓
ALLOYS
↓
MAGNETS
↓
EV / WIND / ELECTRONICS
The government scheme is focused particularly on building the downstream integrated REPM manufacturing chain.
Why the current global supply chain is vulnerable
The rare-earth magnet industry is concentrated geographically.
That means any export restriction, geopolitical conflict or supply-chain disruption can quickly affect manufacturers that rely heavily on imports.
For Indian companies, the consequences could include:
- Higher input costs
- Production delays
- Supply shortages
- Higher inventory requirements
- Greater uncertainty
EXPORT RESTRICTIONS
↓
Less magnet supply
↓
Higher prices
↓
Higher EV / industrial costs
↓
Production pressure
Domestic production is intended to reduce this vulnerability.
Government extends bid deadline to August 12
The government’s rare-earth magnet manufacturing tender is currently moving through the bidding process.
The Ministry of Heavy Industries recently extended the bid submission deadline to August 12, 2026, from July 29.
Technical bids are scheduled to open on August 13, 2026.
REPM TENDER
August 12, 2026
↓
Bid submission deadline
August 13, 2026
↓
Technical bids open
That timing makes L&T’s reported preparations particularly significant.
15 bids have reportedly been received
The government programme has attracted considerable interest.
According to people familiar with the matter, the programme had received 15 bids, including a consortium involving Japan’s Proterial Ltd. and two Indian automakers.
L&T’s potential participation would add another major industrial player to the competition.
REPM SCHEME
15 bids reported
↓
Competitive selection
↓
Up to 5 beneficiaries
↓
6,000 MTPA capacity
The high level of interest indicates that Indian and international companies see strategic value in developing domestic magnet manufacturing.
Proterial brings Japanese magnet expertise
One reported bidder is a consortium involving Japan’s Proterial, a company with expertise in advanced magnetic materials.
Japanese companies have historically played an important role in the development of high-performance permanent magnet technologies.
A consortium involving a specialised foreign technology provider and Indian automotive companies illustrates the kind of partnerships the government hopes to attract.
GLOBAL TECHNOLOGY
+
INDIAN MANUFACTURING
↓
Domestic REPM production
L&T’s search for a technology partner reflects the same broader model.
The scheme is designed to last seven years
The government’s programme has a total duration of seven years from the award of the project.
It includes:
- A two-year gestation period for setting up integrated facilities
- Five years of incentive support linked to magnet sales
7-YEAR SCHEME
Years 1–2
Plant setup
↓
Years 3–7
Production + incentives
This gives manufacturers time to build facilities before they are expected to achieve sustained commercial production.
Government wants 6,000 tonnes of annual capacity
The target of 6,000 MTPA is designed to create a meaningful domestic manufacturing base.
The government expects this capacity to support India’s growing demand for REPMs.
6,000 TONNES / YEAR
↓
EV motors
+
Wind turbines
+
Electronics
+
Industrial equipment
+
Defence
↓
Reduced import dependence
The government says India’s REPM consumption is expected to double by 2030 from 2025 levels.
Why demand is expected to rise
Several structural trends are driving magnet demand.
Electric vehicles
More EVs mean more demand for traction motors.
Renewable energy
Wind generation requires high-performance electrical machinery.
Industrial automation
Robots and automated equipment use compact high-performance motors.
Electronics
Small motors and actuators are widely used in electronic devices.
Defence
Advanced systems require compact and efficient components.
EVs
+
Wind
+
Robotics
+
Electronics
+
Defence
↓
REPM demand
This provides a long-term demand base for domestic manufacturers.
L&T’s diversification beyond infrastructure
L&T is traditionally associated with:
- Infrastructure
- Construction
- Heavy engineering
- Industrial projects
- Defence
- Technology services
Rare-earth magnet manufacturing would represent another move into a specialised advanced-manufacturing segment.
L&T
Construction
+
Heavy engineering
+
Defence
+
Technology
+
EV motors
+
Rare-earth magnets
The potential move could therefore expand L&T’s position in India’s emerging clean-tech manufacturing ecosystem.
Rare-earth magnets could become a strategic industrial product
The importance of rare-earth magnets extends beyond their market value.
They are becoming strategically important because they sit at the intersection of several national priorities:
- Electric mobility
- Renewable energy
- Defence
- Aerospace
- Electronics
- Advanced manufacturing
RARE-EARTH MAGNETS
↓
Clean energy
+
Advanced manufacturing
+
Defence
+
Electronics
↓
Strategic technology
This is why governments around the world are attempting to reduce dependence on concentrated supply chains.
India’s policy goes beyond subsidies
The government is not simply offering financial incentives.
The broader objective is to create an integrated domestic ecosystem.
That means developing capabilities across multiple stages of production.
POLICY
↓
Raw material
↓
Processing
↓
Metals
↓
Alloys
↓
Magnets
↓
Motors
↓
EVs / industrial products
The more stages that are localised, the greater India’s ability to control its supply chain.
The EV connection could be especially important
L&T’s potential magnet investment becomes more strategically interesting because of its plans for electric traction motors.
A locally manufactured magnet could potentially be integrated into locally produced motors.
Rare-earth material
↓
Magnet
↓
L&T traction motor
↓
EV manufacturer
↓
Electric vehicle
This could eventually create a domestic supply chain stretching from materials to finished electric-mobility components.
India’s motor localisation push
India is also pushing manufacturers to localise electric traction motors.
This creates another incentive for domestic magnet production.
If EV manufacturers and motor suppliers increasingly need locally sourced motors, domestic magnet production could become an important upstream requirement.
EV LOCALISATION
↓
Motor localisation
↓
Magnet demand
↓
Domestic REPM manufacturing
↓
Lower import dependence
The development of a domestic magnet industry could therefore complement India’s broader EV manufacturing strategy.
L&T could gain supply-chain control
If L&T eventually manufactures both magnets and traction motors, it could gain greater control over a critical component.
Potential benefits could include:
- More predictable supply
- Greater control over quality
- Reduced import exposure
- Better supply planning
- Potential cost advantages at scale
However, these benefits would depend on the economics and efficiency of domestic production.
The technology challenge remains significant
Rare-earth magnet manufacturing is not an easy industry to enter.
The company must develop expertise in:
- Material purity
- Alloy composition
- Powder processing
- Magnetic alignment
- Sintering
- Heat treatment
- Surface coating
- Magnetisation
- Quality control
REPM MANUFACTURING
Materials
↓
Alloying
↓
Powder
↓
Alignment
↓
Sintering
↓
Heat treatment
↓
Coating
↓
Magnetisation
↓
Testing
This explains why L&T is expected to seek a specialised technology partner.
Scale will determine competitiveness
China’s dominance is partly based on enormous manufacturing scale and an integrated supply chain.
Indian manufacturers will need to achieve sufficient scale to compete on cost and quality.
DOMESTIC PRODUCTION
↓
Scale
↓
Lower unit costs
↓
Competitive pricing
↓
More customers
↓
Higher production
↓
More scale
The government’s incentive programme is intended to help manufacturers reach that scale.
Environmental standards will also matter
Rare-earth processing can involve environmentally sensitive chemical processes.
An integrated domestic ecosystem therefore needs strong environmental controls.
The government has said the development of the domestic REPM industry will need to maintain appropriate environmental standards while building supply-chain capacity.
RARE-EARTH PROCESSING
↓
Industrial activity
+
Environmental controls
↓
Sustainable manufacturing
This will be an important consideration as India scales production.
What L&T’s entry could mean for competitors
If L&T enters the sector, it could intensify competition for the limited number of government-supported manufacturing allocations.
The scheme is designed around five beneficiaries, while reports indicate that around 15 bids have been received.
15 REPORTED BIDS
↓
Competitive selection
↓
Up to 5 beneficiaries
↓
6,000 MTPA total capacity
Companies therefore have a strong incentive to demonstrate technology, financing capability and long-term manufacturing plans.
The scheme could attract global technology
The participation of international companies and technology partners could accelerate India’s learning curve.
Instead of developing every process independently, Indian manufacturers can potentially combine:
Indian capital + Indian manufacturing + global technology.
GLOBAL TECHNOLOGY
+
INDIAN CAPITAL
+
INDIAN DEMAND
↓
Domestic REPM ecosystem
This model has been used in several other advanced manufacturing sectors.
What happens if L&T wins an allocation?
If L&T secures capacity under the scheme, the company would need to establish an integrated manufacturing facility and develop the required technology partnership.
The plant would ultimately need to convert rare-earth inputs into finished high-performance magnets.
L&T WINS CAPACITY
↓
Technology partner
↓
Plant construction
↓
Equipment installation
↓
Testing
↓
Commercial production
The government scheme allows a two-year gestation period for setting up the integrated facility.
What happens if L&T does not win?
Even if L&T does not receive an allocation, the company could potentially pursue rare-earth magnet technology through other partnerships or continue focusing on its EV motor plans.
The government scheme is only one route to building domestic capabilities.
The broader industrial trend toward supply-chain localisation is likely to continue.
What this means for India’s EV industry
A successful domestic magnet industry could eventually benefit EV manufacturers.
Today, dependence on imported magnets can expose motor manufacturers to:
- Currency fluctuations
- Shipping disruptions
- Export restrictions
- Geopolitical risks
- Price volatility
Domestic supply could reduce some of those risks.
DOMESTIC MAGNETS
↓
DOMESTIC MOTORS
↓
EV MANUFACTURING
↓
LOWER IMPORT EXPOSURE
The effect on final EV prices, however, will depend on production costs and scale.
What this means for renewable energy
Wind turbines are another major potential demand source.
Domestic magnet manufacturing could help renewable-energy equipment makers reduce dependence on imported components.
DOMESTIC REPM
↓
Wind generator
↓
Wind turbine
↓
Renewable electricity
This aligns with India’s broader clean-energy transition.
What this means for defence
For defence manufacturers, supply-chain security can be more important than simply obtaining the lowest-cost component.
Domestic production could help reduce the risk of supply disruptions for strategic systems.
DOMESTIC REPM
↓
Defence systems
↓
Supply security
↓
Strategic resilience
This is one reason rare-earth magnets are increasingly treated as strategic materials.
India’s broader rare-earth strategy
The magnet programme is part of a wider effort to strengthen India’s rare-earth ecosystem.
The government is seeking to improve domestic capabilities across mining, processing and manufacturing while reducing dependence on imported finished products.
RARE-EARTH STRATEGY
Resources
↓
Mining
↓
Processing
↓
Metals
↓
Magnets
↓
Advanced manufacturing
The long-term objective is to move India higher up the value chain.
The strategic importance of L&T’s potential entry
L&T is not a conventional magnet manufacturer.
Its interest therefore signals that rare-earth magnets are increasingly being viewed as a strategic industrial component rather than a niche materials business.
The company brings:
- Large-scale engineering capability
- Industrial project expertise
- Manufacturing experience
- Defence exposure
- EV ambitions
- Access to large corporate customers
That combination could make it a significant potential participant in the sector.
Key takeaways
1. Larsen & Toubro is preparing to bid for India’s ₹7,280-crore rare-earth permanent magnet manufacturing scheme.
2. L&T plans to manufacture rare-earth magnets in India, according to people familiar with the company’s plans.
3. The company is expected to seek a specialised technology partner because high-performance magnet manufacturing requires significant technical expertise.
4. The government scheme aims to create 6,000 MTPA of integrated REPM manufacturing capacity in India.
5. The capacity is intended to be allocated among up to five beneficiaries, with each beneficiary eligible for up to 1,200 MTPA.
6. The scheme covers the integrated value chain from rare-earth oxides to metals, alloys and finished magnets.
7. Rare-earth magnets are critical for EVs, wind turbines, electronics, aerospace and defence applications.
8. China currently dominates global rare-earth magnet production, making domestic capacity strategically important for India.
9. The government has extended the current bid submission deadline to August 12, 2026, with technical bids scheduled to open on August 13.
10. L&T’s potential magnet business is linked to its plans to manufacture next-generation EV traction motors in India.
Conclusion
Larsen & Toubro’s potential entry into rare-earth permanent magnet manufacturing marks an important development in India’s attempt to build a domestic supply chain for one of the most strategically important components in modern manufacturing.
The key point is that L&T has not yet won a government allocation.
The company is preparing to bid for a share of the government’s ₹7,280-crore REPM manufacturing scheme, which aims to establish 6,000 tonnes of annual integrated manufacturing capacity in India.
If successful, L&T would join a limited group of companies selected to develop domestic rare-earth magnet production.
The timing is significant.
Rare-earth magnets are increasingly essential to the technologies India wants to scale over the next decade — particularly electric vehicles, renewable energy, robotics, advanced electronics, aerospace and defence.
Electric vehicles are perhaps the clearest example.
Modern EV traction motors can use high-performance permanent magnets to achieve strong power density and efficiency. As India’s EV industry expands, the country’s dependence on imported magnets could become an increasingly important supply-chain vulnerability.
L&T’s interest is particularly relevant because the company is already moving into next-generation EV traction motors through its partnership with Israel-based EVR Motors. A domestic magnet manufacturing capability could potentially give L&T greater control over an important upstream component of that business.
But the strategic argument extends far beyond L&T.
China’s overwhelming position in the global rare-earth magnet supply chain has exposed manufacturers worldwide to geopolitical and trade risks.
When export restrictions tighten, companies that depend on imported magnets can face higher prices, supply shortages and production uncertainty.
India wants to avoid being caught in that position.
The government’s answer is therefore not simply to encourage assembly of magnets in India. It is attempting to establish an integrated value chain that runs from rare-earth oxides through metals and alloys to finished permanent magnets.
That is a much more ambitious objective.
It also explains why the government has offered financial support and why the current bidding process has attracted substantial interest.
Reports indicate that 15 bids have been received, while the programme is designed to select up to five beneficiaries.
The competitive process will determine which companies ultimately receive capacity.
For L&T, winning a place would provide an opportunity to diversify into advanced materials manufacturing while supporting its broader EV strategy.
For India, the potential benefits are larger.
A successful domestic magnet industry could:
Reduce import dependence → strengthen EV supply chains → support renewable-energy manufacturing → improve defence supply security → build advanced-materials capabilities.
However, establishing the industry will not be easy.
Rare-earth magnet manufacturing requires highly specialised technology, precise materials processing and significant manufacturing expertise. L&T is therefore expected to seek a technology partner rather than attempt to develop the entire process independently.
The government’s two-year gestation period for setting up facilities also highlights the complexity of the project.
Then comes the bigger challenge: scale.
China’s advantage does not come simply from having rare-earth resources. It has developed an enormous, integrated manufacturing ecosystem with deep expertise and economies of scale.
Indian producers will need to achieve sufficient capacity, quality and cost competitiveness to replace imports and eventually compete in global markets.
The government is trying to create the conditions for that to happen through a seven-year support programme, domestic capacity targets and competitive allocation.
The bid deadline has now been extended to August 12, 2026, with technical bids scheduled to open on August 13.
The next major question is therefore which companies emerge as the winners.
If L&T secures an allocation and successfully develops the required technology partnership, the company could become part of a new Indian supply chain connecting rare-earth materials to magnets, magnets to electric motors, and electric motors to EVs and other advanced machines.
That would represent a significant expansion beyond L&T’s traditional infrastructure and engineering businesses.
More importantly, it would be another step toward India’s larger industrial objective:
moving from importing critical components to manufacturing them domestically.
For a country seeking to become a major EV, renewable-energy, electronics, aerospace and defence manufacturing hub, control over rare-earth magnet production could become an increasingly important competitive advantage.
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