Michelin to invest $867 mln in Indian tyre plant

French tyre maker Michelin on Monday announced plans to invest nearly 900 million dollars to build a tyre plant to supply India's fast-growing vehicle market.

The plant will make radial truck and bus tyres and mainly target the country's domestic market, a statement by Michelin, one of the world's biggest tyre manufacturers, said.

"We believe that India holds tremendous potential for the Michelin Group in terms of establishing a world-class manufacturing facility," Prashant Prabhu, head of Michelin's Africa-India-Middle East division, said in a statement.

The Michelin Group is investing 40 billion rupees (867 million dollars) to build the plant at Thervoy Kandigai, 50 kilometres (30 miles) north of Tamil Nadu state capital of Chennai, the statement said.

The plant will start operations in 2012 and "will focus on the growing Indian market", the statement said.

Prabhu signed a preliminary memorandum of understanding for construction of the plant with the Tamil Nadu state government on Monday.

Michelin had earlier been in the process of negotiating with the Tamil Nadu state government for land on which to build the plant.

"I would like to express my deepest gratitude to the Tamil Nadu government for offering Michelin a gateway to this state," Prabhu said.

Michelin will join other foreign and domestic vehicle and parts makers which have transformed Tamil Nadu into a major automotive hub. The state government has been on an aggressive drive to lure investment from abroad.

The plant, which will sprawl over 290 acres (117.35 hectares) will employ 1,500 people.

Announcement of the plant comes as the tyre maker is cutting more than 1,000 jobs in France.

Michelin reported in October its sales fell 10.9 percent in the third quarter on a 12-month comparison to 3.75 billion euros (5.58 billion dollars) amid a slump in global demand.

The company said India offered significant potential with the country's plans for massive road construction.

"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 tyres," said Michelin India commercial director Philippe Neyrat.