JSW Group and Volkswagen Group have signed a non-binding memorandum of understanding for a proposed alliance in India passenger vehicle operations.
Škoda Auto Volkswagen India has confirmed it has signed a non-binding Memorandum of Understanding with JSW Group to explore the key principles for a strategic partnership in India. It said the planned cooperation aims to “strengthen competitiveness through expanded product offerings, deeper localisation, and enhanced manufacturing and R&D capabilities.”
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Škoda Auto Volkswagen India says the agreement is based on a two party partnership structure with joint control, clearly defined roles, and mechanisms designed to support swift and effective decision making. Moreover, “deep localisation and platform synergies are intended to support competitive product offerings, increased scale, and improved profitability in the Indian market.”
Škoda Auto Volkswagen India also added that “with Skoda Auto leading the region, the Indian market is rapidly becoming a strong pillar outside Europe and a strategic hub to unlock potential in neighbouring regions and adjacent markets.”
In 2025, the Group – Škoda Auto Volkswagen India recorded a ~36% year-over-year domestic volume growth, while brand Škoda doubled its sales in India “with the strongest year-on-year gains across all Škoda markets.”
The two sides are targeting a final binding agreement by the end of 2026.
The proposed alliance would sit in a new entity involving JSW and Skoda Auto Volkswagen India Pvt Ltd (SAVWIPL), separate from JSW’s current ventures, including its partnership with SAIC Motor.
The joint venture would initially cover the eight Skoda and Volkswagen models sold in India, along with future launches, including electric vehicles.
However, due diligence and the valuation process for Volkswagen-Skoda India operations may be less than straightforward.
One key issue will be Volkswagen’s potential tax liability of about Rs200bn ($2.10bn) tied to an alleged circumvention of customs duties.
According to media reports, customs authorities have alleged that the company imported nearly complete vehicles in unassembled form while declaring them as separate components, resulting in duties of 5-15% instead of the 30-35% rate for completely knocked down (CKD) units.
The alleged practice involved the Skoda Kodiaq and Superb, Audi A4 and Q5, and Volkswagen Tiguan and there could be a need for further talks between the two parties over where liabilities may lie and how that impacts the valuation.
The news from India comes as parent company Volkswagen Group undergoes broader restructuring.
The group’s supervisory board has approved Future Plan 2030, under which a further 50,000 positions will be cut across the group.
This follows an earlier announcement this year of 50,000 job cuts, bringing the total number of planned reductions at Volkswagen Group by the end of the decade to 100,000.
