JSW Group, Volkswagen Sign MoU for 51:49 India Joint Venture

Indian industrial giant JSW Group and Volkswagen Group have signed a memorandum of understanding to establish a joint venture in India, with JSW holding a 51% majority stake and Volkswagen Group retaining 49%.

The MoU initiates exclusive negotiations on valuation and other commercial terms, with both sides targeting a binding definitive agreement by the end of 2026. The proposed JV will operate through a new entity between JSW and Skoda Auto Volkswagen India Private Limited (SAVWIPL), Volkswagen's existing Indian subsidiary, and will be independent of JSW's other partnerships.

Scope and Strategy

The joint venture will initially encompass eight Skoda and Volkswagen models currently sold in India, plus future launches including electric vehicles. A SAVWIPL spokesperson confirmed the development.

Volkswagen has operated in India for over 25 years but captures only around 2.5% of the market. The partnership will allow the German automaker to share costs with a local partner and optimize its existing Indian facilities. JSW Group said it remains open to eventually incorporating Volkswagen's luxury marques — Audi, Porsche, Lamborghini and Bentley — into the alliance.

Tax Dispute Looms

Valuation is a central negotiating issue. One key concern involves a potential tax liability facing Volkswagen Group in India, estimated at approximately 200 billion rupees (approx. $2.4 billion), stemming from a customs dispute. Indian authorities allege that Volkswagen evaded the full 30%-35% import tariff on complete vehicles by declaring them in disassembled "parts" form, paying only 5%-15% duty instead.

Reports indicate JSW is unlikely to absorb this liability, and the potential tax risk will factor into the business valuation.

Production and Export Ambitions

SAVWIPL currently operates factories in Chakan and Aurangabad with a combined annual capacity of around 400,000 vehicles, against current annual sales of roughly 100,000 units in India. Both sides are also exploring the possibility of using India as an export base, particularly for electric vehicles, leveraging the country's free trade agreements with markets such as Europe.

The two companies plan to deepen localisation and exploit platform synergies to improve product competitiveness, scale up production and enhance profitability in the Indian market.