Larsen & Toubro Ltd (L&T) plans to manufacture rare-earth magnets in India and is preparing a bid for the government incentive policy valued at Rs 72.8 bn, according to people familiar with the matter. The sources said the deliberations remain private and that the company will need to secure a technology partner with expertise in high-precision engineering. The move marks a diversification for the conglomerate beyond construction, heavy engineering and industrial projects.

The programme has attracted 15 bids so far, including one from a consortium comprising Japan's Proterial Ltd and two Indian automakers, the sources said. L&T's entry would align with its intended investment in motors for electric vehicles, which rely on rare-earth permanent magnets. The component is critical for wind turbines, industrial robots and a wide range of electronics.

The government initiative follows export curbs by China, which controls 90 per cent of global output, and seeks to build a domestic supply chain. India approved a seven-year programme last year that includes Rs 64.5 bn in sales-linked incentives and Rs 7.5 bn in capital subsidies to boost magnet production. The plan aims to establish domestic capacity of 6,000 t annually and offers support to about five companies.

Authorities hope the incentives will encourage both domestic companies and overseas magnet makers to set up local production and reduce reliance on Chinese suppliers. The proposed magnet production would also support L&T's plan to build next-generation electric vehicle traction motors locally, for which the company has partnered with Israel-based EVR Motors. L&T's EPS Mobility unit has secured a maiden commercial order to supply 500,000 such motors to a two-wheeler manufacturer over three years. A company spokesperson did not immediately respond to a request for comment.