MILAN, Italy (Aug. 30)—Pirelli S.p.A. is negotiating a tire supply contract with Ceat Ltd., including the provision of certain production equipment to the Mumbai, India-based tire maker, the Italian group has confirmed. The "Financial Express" of India reported earlier that Pirelli had agreed to outsource production of 10,000 radial passenger car tires a month to Ceat, starting in October. This report is "basically correct" but talks over the deal are still in progress, a Pirelli spokesman said. Pirelli previously has signaled its intention of forming alliances in India as long as it could maintain control over product quality. Until now, however, the group's presence has been limited to a technical tie-up with Birla Tyres of Calcutta. Ceat, the tire-making arm of the RPG Group of India, is principally a supplier of bias-ply tires, but has been trying to establish a greater presence in the radial tire market.