The conglomerate is preparing a bid for the government’s 72.8-billion-rupee ($764 million) incentive policy for such magnets, the people said, asking not to be identified because the deliberations are private. L&T will need to secure a technology partner with the necessary expertise for its foray in a sector known for high-precision engineering, they added.
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The program has received 15 bids so far, the people said, including one from a consortium comprising Japan’s Proterial Ltd. and two Indian automakers.
L&T’s move would mark a diversification for India’s largest infrastructure company beyond its traditional lines of businesses such as construction, heavy engineering and industrial projects. The plan also dovetails with its proposed investment in motors for electric vehicles, which rely on rare-earth permanent magnets.
An L&T spokesperson did not immediately respond to a request for comment.
The company’s potential entry into rare-earth permanent magnets aligns with the government’s initiative to build a domestic supply chain after China, which controls 90% of the global output, restricted exports of the critical component in April last year. Besides electric vehicle motors, the magnets are used in wind turbines, industrial robots and a range of electronics.India approved a seven-year program including 64.5 billion rupees in sales-linked incentives and 7.5 billion rupees in capital subsidies last year to boost magnet production. The country aims to establish domestic capacity of 6,000 metric tons annually, offering support to about five companies.
The government hopes the incentives will encourage both domestic companies and overseas magnet makers to set up local production, reducing dependence on Chinese suppliers, which have benefited from state support and the economies of scale.
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L&T’s bid to manufacture rare-earth magnets will also support its own plan to build next-generation electric vehicle traction motors locally. The company has partnered with Israel-based EVR Motors for it, the engineering firm said in its earnings call last month.
Its EPS Mobility unit secured its maiden commercial order to supply 500,000 such motors to a two-wheeler manufacturer over three years, L&T said without naming the client.