The first phase of the plant is expected to start production in 2019. The RPG Enterprise flagship firm has already acquired a 163-acre land parcel for the project.
"The company is setting up a greenfield plant with an estimated investment of approximately Rs 20 bn to be spent over three to five years," Ceat said in its annual report for 2017-18.
Civil work for the first phase of the project has begun and the plant is expected to begin production in the next 12 months, it added.
Ceat will start with passenger car radial tyres at the plant with an initial capacity of around 250 tonnes per day. It also plans to utilise the facility for exports.
The company currently ships tyres to more than 100 countries.
Ceat has manufacturing facilities at Bhandup, Mumbai, Nashik, Halol and Nagpur. Besides, it also has an off-highway tyre manufacturing plant at Ambernath, Maharashtra, which commenced commercial production in last fiscal.
Ceat meets its production through in-house plants and secures the rest from various outsourcing partners on conversion-cost basis and bought-out basis.
It also operates in Sri Lanka through a 50:50 Joint Venture (JV) named CEAT Kelani Holdings Company (Private).
In the domestic market, the company has a distribution network of more than 4,500 dealers and over 30,000 sub-dealers.