Dunlop chairman P.K. Ruia (right) with executive director and CEO D.P. Dani in Calcutta on Tuesday. A Telegraph picture

Calcutta, Aug. 19: Dunlop promoter Pawan Ruia is planning to set up a plant in Assam to make truck tyres and off-the-road tyres.

The plant, near Guwahati, will involve Rs 500 crore investment and have an initial production capacity of 50 tonne per day.

Being in the Northeast, the project will be eligible for various tax breaks. The most lucrative is a 30 per cent capital subsidy, in cash, from the Centre.

“We have acquired 60 acres of land. It is in our possession. The plant should be ready in one-and-a-half years,” Ruia said after the 81st annual general meeting of Dunlop.

The project will be executed by a new entity, which will be an associate company of Dunlop.

The plant will primarily supply to the Northeast market. It will source the main raw material, natural rubber, from Tripura.

Once completed, the plant will add strength to Ruia Group’s tyre business which largely comprises Dunlop, Falcon Tyres and Monotona Tyres.

So far, Ruia has not been able to stabilise production at Dunlop. The Ambattur plant in Tamil Nadu is lying idle for 3-4 months. Production at Sahagunj in Bengal could not be ramped up.

“Whenever we tried to increase the production level, something or the other has happened. But I am hopeful,” he said.

Dunlop is only making truck and off-the-road tyres which is required mostly in the mining industry.

Despite the problems, Dunlop is planning expansion at Sahagunj to produce an additional 100 tonnes a day after stabilising its existing production.

The company will also install a 10MW captive power plant at a cost of Rs 50 crore to cut production cost.