BKT and Pirelli Plan 50:50 Tyre Manufacturing JV in India

BKT and Pirelli Plan Equal Tyre Manufacturing Joint Venture in India

Balkrishna Industries (BKT) and Pirelli Tyre have signed agreements to establish a 50:50 joint venture (JV) for manufacturing passenger car radial (PCR) tyres in India. Under the proposed arrangement, both companies will manufacture tyres under their respective brands, supported by a new manufacturing plant planned in the country. The agreements establish a framework for the partnership, although the definitive joint venture agreement has not yet been executed. The arrangement is intended to expand BKT’s participation in the passenger car tyre segment while providing Pirelli with a manufacturing arrangement in India.

Framework Agreements Set Out the Proposed Partnership

The companies signed a framework agreement, an offtake agreement, and a service agreement on October 22, 2026. The joint venture is expected to be incorporated by December 31, 2030, subject to the fulfillment or waiver of specified conditions. Until the definitive agreement is executed and the required conditions are addressed, the proposed partnership remains subject to those outstanding steps. The planned joint venture will have a four-member board, with each partner nominating two directors. The chairperson position will rotate between the companies, and manufacturing capacity will be shared equally.

BKT to Manufacture Pirelli-Branded Tyres Under Interim Offtake Agreement

Before the joint venture becomes operational, the offtake agreement will allow BKT to manufacture Pirelli-branded passenger car radial tyres at its existing PCR plant in Bhuj, Gujarat. Production will follow Pirelli’s specifications, and the resulting tyres will be supplied to Pirelli and its affiliates in India and overseas. This interim arrangement creates a production route for Pirelli-branded PCR tyres while the proposed joint venture moves toward incorporation. It also uses BKT’s existing manufacturing facility rather than requiring the planned joint venture plant to be operational before supplies can begin under the agreement.

Pricing, Payments, and Minimum Offtake Commitments

The offtake agreement specifies a pricing structure based on actual raw material costs plus conversion costs. Payments for domestic supplies will be made in Indian rupees, while payments for exports will be made in euros. Pirelli will have a minimum annual offtake commitment, matched by a corresponding capacity commitment from BKT. These provisions establish the commercial basis for production and supply during the interim period. The agreement therefore links Pirelli’s purchasing commitment with BKT’s obligation to make corresponding manufacturing capacity available, while distinguishing payment currencies according to whether the supplies are domestic or exported.

Limited Know-How and Trademark Rights for Production

Pirelli will grant BKT limited, non-exclusive rights to use specified Pirelli know-how and trademarks for manufacturing the covered passenger car radial tyres. The agreement also restricts BKT from manufacturing comparable or competing PCR tyres for third parties. However, BKT can continue developing, manufacturing, and selling its own BKT-branded passenger car radial tyres. These conditions define how Pirelli’s intellectual property can be used within the interim production arrangement while preserving BKT’s ability to continue its own branded PCR business. The rights are limited to the specified know-how and trademarks rather than an unrestricted license.

Offtake Agreement Duration and Extension Conditions

The offtake agreement is scheduled to terminate once the joint venture becomes operational and can meet Pirelli’s tyre requirements. If that condition is not met, the agreement will remain in force until December 31, 2031, with an option for the parties to extend it mutually. This structure connects the interim supply arrangement to the readiness of the proposed joint venture while providing a stated end date if the transition does not occur as anticipated. The ability to extend the agreement depends on mutual agreement between the companies, rather than an automatic continuation beyond the specified date.

Pirelli to Provide Testing and Technical Support for BKT Tyres

Under a separate service agreement, Pirelli will provide technical support and testing services for BKT-branded tyres covering passenger cars, SUVs, and two-wheelers. The services will use Pirelli’s testing facilities outside India, including proving grounds, simulation systems, and equipment. BKT will pay for the services in euros according to an agreed pricing schedule, with fees set on an arm’s-length basis. The services will be provided against requests and purchase orders issued by BKT. This arrangement gives BKT access to specified testing and technical capabilities for its own branded products without making those services part of the proposed joint venture’s manufacturing arrangement.

Exclusivity Restrictions for Tyre Partnerships in India

The framework agreement includes an exclusivity restriction that prevents either company from entering into a joint venture or similar arrangement with a third party in India to manufacture car, light truck, motorcycle, or bicycle tyres while the agreement remains in force. Plants wholly owned by either company are excluded from this restriction. The provision defines the scope of the partners’ restrictions on competing manufacturing arrangements during the agreement period, while retaining an exception for wholly owned facilities. Its coverage extends beyond passenger car tyres to include the other specified tyre categories, as stated in the framework agreement.

What the Proposed Partnership Means for BKT and Pirelli

The proposed partnership would expand BKT’s presence in the passenger car tyre segment and give Pirelli a manufacturing arrangement in India beyond its existing commercial presence in the country. The planned equal ownership structure, shared manufacturing capacity, interim offtake arrangement, and technical services agreement establish distinct elements of the collaboration. However, the definitive joint venture agreement remains outstanding, and incorporation is subject to the fulfillment or waiver of specified conditions. The companies have also set out an interim supply mechanism and a service arrangement, allowing their cooperation to cover manufacturing, product testing, and technical support under separate agreements.

Industry Impact & Outlook

The proposed BKT–Pirelli partnership could strengthen collaboration between an established Indian tyre manufacturer and an international tyre brand, combining BKT’s existing production facility in Bhuj with Pirelli’s specifications, technical support, and testing resources. For the Indian passenger car tyre segment, the arrangement signals a planned expansion of manufacturing cooperation, while the interim offtake agreement provides a defined supply mechanism before the joint venture becomes operational. The eventual impact will depend on execution of the definitive agreement, fulfillment or waiver of the specified conditions, and the joint venture’s ability to meet Pirelli’s requirements. Until then, the agreements describe a proposed structure rather than a completed joint venture.

Frequently Asked Questions

What have BKT and Pirelli agreed to establish?
Balkrishna Industries and Pirelli Tyre have signed agreements to establish a 50:50 joint venture for manufacturing passenger car radial tyres in India. Under the proposal, both companies will manufacture tyres under their respective brands, and a new manufacturing plant is planned in the country. The definitive joint venture agreement has not yet been executed. The proposed venture is expected to be incorporated by December 31, 2030, subject to the fulfillment or waiver of specified conditions. Its four-member board will include two nominees from each company, with the chairperson rotating between the partners.

Where will BKT initially manufacture Pirelli-branded tyres?
BKT will initially manufacture Pirelli-branded passenger car radial tyres at its existing PCR plant in Bhuj, Gujarat, under the interim offtake agreement. Production will follow Pirelli’s specifications, and supplies will go to Pirelli and its affiliates in India and overseas. This arrangement is intended to operate before the proposed joint venture becomes operational. It establishes an interim production and supply mechanism using BKT’s existing facility, rather than requiring the new joint venture plant to be ready before the specified supplies can be made under the agreement.

How will pricing and payments work under the offtake agreement?
The agreement bases pricing on actual raw material costs plus conversion costs, linking the price to the materials used and the conversion work required for manufacturing. Payments for domestic supplies will be made in Indian rupees, while export payments will be made in euros. Pirelli will have a minimum annual offtake commitment, matched by a corresponding capacity commitment from BKT. These provisions define the commercial terms of the interim supply arrangement. The source does not specify the actual pricing amounts, the minimum annual volume, or the detailed conversion-cost schedule.

What restrictions apply to BKT’s use of Pirelli technology and trademarks?
Pirelli will grant BKT limited, non-exclusive rights to use specified Pirelli know-how and trademarks for manufacturing the covered passenger car radial tyres. BKT will not be permitted to manufacture comparable or competing PCR tyres for third parties under the stated restriction. However, it can continue developing, manufacturing, and selling its own BKT-branded passenger car radial tyres. The agreement therefore permits a defined use of Pirelli intellectual property for the interim manufacturing arrangement while distinguishing that activity from BKT’s own branded business. The rights do not amount to an unrestricted license for all Pirelli technology or trademarks.

What technical services will Pirelli provide to BKT?
Under a separate service agreement, Pirelli will provide technical support and testing services for BKT-branded tyres used on passenger cars, SUVs, and two-wheelers. The services will use Pirelli testing facilities outside India, including proving grounds, simulation systems, and equipment. BKT will pay in euros according to an agreed pricing schedule, with fees set on an arm’s-length basis. Services will be supplied against requests and purchase orders issued by BKT. The agreement thus covers testing and technical support for BKT-branded products separately from the proposed joint venture’s manufacturing and interim offtake arrangements.

When will the offtake agreement end, and what is the exclusivity restriction?
The offtake agreement is scheduled to end when the joint venture becomes operational and can meet Pirelli’s tyre requirements. If that condition is not met, it remains in force until December 31, 2031, with an option for mutual extension. Separately, the framework agreement restricts either company from entering into a joint venture or similar arrangement with a third party in India to manufacture car, light truck, motorcycle, or bicycle tyres while the agreement remains in force. Plants wholly owned by either company are excluded from this exclusivity restriction.