The world’s biggest tyre manufacturer, Michelin, is to lay off a tenth of its domestic workforce in France while exploring opportunities for lower cost manufacturing in India.

It has been reported that the tyre maker is to open a manufacturing unit in India’s Tamil Nadu state and will invest $1.48bn over the next 10 years creating up to 2000 jobs.

Advertisement

Michelin is said to be seeking government approval to become the sole owner of Michelin India in Tamil Nadu. A spokesman for the company said the firm is in negotiations with the Tamil Nadu state government about an actual location for the plant.

But there is some speculation that Michelin will set up the greenfield facility on a 117.3 hectares plot of land at the Sipcot Industrial Park in Oragadam, 40 kilometres from Chennai, where Daimler is establishing a commercial vehicle plant.

The Indian government has been easing restrictions on foreign investment over the past year in a shift of strategy to improve the country’s FDI inflows.

In February this year the Indian government announced measures to enable larger inflows by easing the limit on investment a foreign-owned company can make in the country.

And in July, the government announced plans for legislative changes which would open its higher education sector to foreign investment and some of the world’s leading universities next year to help meet the growing skills requirements.

Michelin aims to cut the number of its 25,000 workers in France by at least 2300 through voluntary redundancy and early retirement in the next three years to ensure its domestic sites remain competitive. The tyre manufacturer employs 120,000 people worldwide.

While manufacturing jobs are being cut in France and created in India, the firm has pledged to invest $140m to modernise its main R&D centre at its headquarters in Clermont-Ferrand, central France.

The aim is to cut the time it takes to get products to market by half, and to develop more efficient and innovative production processes. Chief executive Michel Rollier said France would continue to be the group’s “strategic hub and innovation centre”.