Balkrishna Industries, India's leading maker of off-highway tyres for tractors, construction and mining vehicles, is moving into premium car tyres through a partnership with Italy's Pirelli, one of the world's best-known tyre brands.
In an exchange filing on Thursday, October 22, Balkrishna Industries, known as BKT, said it had signed a strategic agreement with Pirelli targeting the Indian car tyre market, Business Standard reported.
The deal is structured in two phases. In the first, BKT will produce 800,000 Pirelli-branded premium car tyres in India by 2030. In the second, the two companies will form a 50-50 joint venture and build a plant for "High Value" car tyres under both the Pirelli and Balkrishna brands, serving both India and international markets.
Market reaction
Investors welcomed the announcement. BKT shares rose as much as 4.2% to ₹2,124.60 on Thursday, their highest level in October, and traded about 4% higher at ₹2,122 around midday, even as the Nifty 50 fell 0.8%. The stock had gained about 8% from its 52-week low of ₹1,964.70, hit on October 13, but remains well below its 52-week high of ₹2,775, reached in February.
Complementary strengths
"This partnership brings together complementary strengths," said Arvind Poddar, chairman and managing director of BKT. Joint managing director Rajiv Poddar said "Pirelli's technological leadership and Balkrishna's industrial capabilities provide together a strong foundation."
For BKT, the deal offers a route into passenger car tyres, a segment where it has had little presence. The company is a global leader in off-highway tyres, exporting the majority of its production to markets in Europe, the Americas and elsewhere. Diversifying into car tyres could reduce its dependence on agricultural and construction cycles in export markets.
For Pirelli, the partnership offers a manufacturing base in India and access to one of the world's fastest-growing car markets. Founded in Milan in 1872, Pirelli operates 18 plants in 12 countries and sells in more than 160 countries. It focuses on high-value, premium and prestige tyres, supplying many luxury and performance carmakers and serving as the sole tyre supplier to Formula One.
Why India, why now
India is the world's third-largest car market by sales, and demand for premium vehicles is rising. Sport utility vehicles now account for more than half of passenger vehicle sales, and consumers are increasingly buying larger, more powerful and more expensive cars. These vehicles often require larger, higher-performance tyres, a segment where premium brands command higher prices and margins.
Electric vehicles are also changing tyre requirements. EVs are heavier than comparable petrol cars and deliver instant torque, increasing tyre wear and creating demand for specialised tyres designed for low rolling resistance and reduced noise.
Producing premium tyres locally could help Pirelli compete on price with tyres manufactured in India by rivals, while avoiding import duties. India's tyre market is dominated by domestic manufacturers such as MRF, Apollo Tyres, CEAT and JK Tyre, along with global players including Bridgestone, Michelin and Goodyear.
An export opportunity
The second phase, involving a joint venture plant serving international markets, could make India a manufacturing hub for Pirelli tyres. Global manufacturers have increasingly looked to India as an alternative production base, attracted by its skilled workforce, competitive costs and growing supplier ecosystem.
