Balkrishna Industries (BKT) and Italian tyre manufacturer Pirelli have signed three agreements to establish a 50:50 joint venture (JV) for manufacturing passenger car radial (PCR) tyres in India.

The partnership will enable BKT to enter the passenger car tyre segment and provide Pirelli with a local manufacturing arrangement. The companies signed a framework agreement, an offtake agreement and a service agreement on October 22nd, 2026. The definitive JV agreement is yet to be executed, with incorporation targeted by December 31st, 2030, subject to the fulfilment or waiver of specified conditions.

The proposed joint venture will manufacture tyres under both companies' brands at a new plant in India, with production capacity shared equally. Its four-member board will comprise two directors nominated by each company, with the chairperson position rotating between the partners.

BKT plans to enter the passenger car tyre segment

BKT has identified passenger car tyres as part of its growth plans, building on its existing operations in the off-highway tyre market. Speaking at a press interaction on Thursday, Rajiv Poddar of Balkrishna Industries said the partnership would advance the company's plans to enter new tyre categories.

Poddar said the companies shared similar approaches to long-term planning, customer relationships and product quality. He noted that Pirelli's motorsport background and technological capabilities complemented BKT's manufacturing experience, adding that both companies prioritised long-term business development over short-term opportunities.

Marco Tronchetti Provera of Pirelli said India's economic development and demand for technologically advanced, higher-value tyres were increasing the country's importance to the company's international strategy. He added that similarities in the companies' business approaches and their willingness to invest over the long term had influenced the partnership decision. Establishing manufacturing operations would require time and investment to develop production facilities and business activities, with Pirelli intending to expand its participation in the Indian market through the arrangement.

BKT to manufacture Pirelli-branded tyres at Bhuj plant

Before the joint venture becomes operational, the offtake agreement will allow BKT to manufacture Pirelli-branded PCR tyres at its existing plant in Bhuj, Gujarat. Production will follow Pirelli's specifications, with supplies to the company and its affiliates in India and overseas.

Pricing will be based on actual raw material costs plus conversion costs. Domestic supplies will be paid for in Indian rupees and exports in euros. Pirelli will commit to a minimum annual offtake volume, matched by BKT's corresponding production capacity commitment.

Pirelli will grant BKT limited, non-exclusive rights to use specified Pirelli know-how and trademarks for manufacturing the tyres. BKT will not be permitted to manufacture comparable or competing PCR tyres for third parties under this arrangement but can continue developing, manufacturing and selling passenger car radial tyres under its own brand.

The offtake agreement is scheduled to terminate when the joint venture becomes operational and can meet Pirelli's tyre requirements. Otherwise, it will remain in force until December 31st, 2031, with an option for extension by mutual agreement.

Pirelli to provide testing and technical support

Under the separate service agreement, Pirelli will provide technical support and testing services for BKT-branded tyres for passenger cars, SUVs and two-wheelers. These services will use Pirelli's facilities outside India, including proving grounds, simulation systems and testing equipment.

BKT will pay in euros according to an agreed pricing schedule, with fees determined on an arm's-length basis. Services will be provided against requests and purchase orders issued by BKT, enabling the company to use Pirelli's testing infrastructure while retaining responsibility for developing and selling its own-brand tyres.

Exclusivity provisions and market plans

The framework agreement prevents either company, while it remains in force, from entering into a joint venture or similar arrangement with a third party in India to manufacture car, light truck, motorcycle or bicycle tyres. The restriction excludes plants wholly owned by either company.

The partnership will combine BKT's manufacturing experience in off-highway tyres with Pirelli's experience in on-road tyres, technology and motorsport. The new facility will allocate production capacity equally between the partners, while the interim manufacturing and service arrangements will operate under their respective agreements.

The joint venture remains subject to the execution of the definitive agreement and the fulfilment or waiver of the applicable conditions.