By Denna Bowman
Michelin has announced it will invest 40 billion rupees ($868 million) in setting up a new factory in India’s southern Chennai city.
The French tyres manufacturer expects the factory, which will make radial tires for trucks and buses in India and employ 1,500 people, to start production in 2012.
Michelin signed a pact with the state government of Tamil Nadu to set up the 290-acre plant 50 kilometers (31 miles) north of Chennai, the capital of the province, according to the Wall Street Journal.
Prashant Prabhu, president of Michelin Africa-India-Middle East, said: “We believe that India holds tremendous potential for the Michelin group in terms of establishing a world class manufacturing facility.”
The rise in demand for automobiles has prompted several Indian and foreign tyre makers to invest in the country.
These companies are betting not only on the increasing demand in the local market but also want to use the low-cost manufacturing base in India for exporting tyres.
Philippe Neyrat, commercial director at Michelin’s India unit, said: “An increase in the focus of the government to build better roads to support the challenges of mobility of people and goods in India will result in an ever-increasing demand for radial truck and bus tyres.”
Michelin, the world’s biggest tire maker by sales, has 68 production sites in 19 countries.