L&T wants to make rare-earth magnets in India
What's the story
Larsen & Toubro (L&T) is planning to enter the rare-earth magnet manufacturing sector in India. The move comes as part of a government push to cut down on imports and reduce China's monopoly over this critical industrial component. China currently accounts for nearly 90% of the global production of rare-earth magnets.
Strategic move
L&T preparing bid for government's ₹7,280cr incentive policy
L&T is preparing a bid for the government's ₹7,280 crore ($764 million) incentive policy for rare-earth magnets.
The company will have to find a technology partner with the required expertise to enter this high-precision engineering sector.
So far, 15 bids have been submitted under this program, including one from a consortium of Japan's Proterial Ltd and two Indian auto manufacturers.
Business expansion
Major diversification for L&T
This move by L&T would mark a major diversification for India's largest infrastructure company, which has mostly focused on construction, heavy engineering, and industrial projects.
The plan also complements its proposed investment in electric vehicle motors that use rare-earth permanent magnets.
The company's possible entry into this sector fits well with the government's push to create a domestic supply chain, after China restricted exports of these critical components last year.
Production goals
Government's 7-year program to boost magnet production
Last year, India approved a seven-year program with ₹6,450 crore in sales-linked incentives and ₹750 crore in capital subsidies to boost magnet production.
The country aims to create domestic capacity of 6,000 metric tons per year by supporting five companies.
The government hopes these incentives will attract both Indian and foreign magnet manufacturers to set up local production units and reduce reliance on Chinese suppliers.