The proposed alliance will function by means of a brand new entity between JSW and Volkswagen Group’s native unit Skoda Auto Volkswagen India Pvt Ltd (SAVWIPL), separate from Jindal’s present partnerships together with with China’s SAIC Motor, which sells MG-branded automobiles in India.
A SAVWIPL spokesperson confirmed the event. “The deliberate cooperation goals to strengthen competitiveness by means of expanded product choices, deeper localisation, and enhanced manufacturing and R&D capabilities,” the particular person stated in an electronic mail response to ET.
JSW declined to remark.
The transfer marks a major step in VW’s over three-year quest for a neighborhood companion in India. It can enable the corporate to share prices with a neighborhood companion and make optimum use of its present amenities in India, even because it provides up majority management.
The Jindal household had held a gathering with Klaus Zellmer, chairman of Skoda Auto, Thomas Schafer, CEO of Volkswagen Passenger Automobiles, and member of the board of the VW Group on the JSW Mumbai headquarters on August 17.
ET On-lineET first reported in October 2025 that JSW had revived discussions with Volkswagen and subsequently reported on the proposed deal in its August 5 version. Zellmer later advised ET that VW was open to ceding majority management to a neighborhood companion, with out naming JSW.
The scope of the three way partnership will initially embody the eight Skoda and Volkswagen manufacturers offered in India together with future rollouts, together with electrical automobiles.
JSW has indicated that it’s open to bringing Volkswagen Group’s luxurious marquees Audi, Porsche, Lamborghini and Bentley into the alliance at a later stage.
VW can also be eager to ultimately carry all its manufacturers beneath this JV, individuals cited above stated. Nevertheless, these manufacturers are individually listed, which might make their inclusion within the enterprise difficult.
The SAVWIPL spokesperson stated the proposed partnership construction relies on “joint management, clearly outlined roles, and mechanisms designed to help swift and efficient choice making.”
Deep localisation and platform synergies are meant to help aggressive product choices, elevated scale, and improved profitability within the Indian market, the particular person famous.
The world’s second-largest carmaker behind Toyota has been struggling to achieve scale in India the place the highest 4 gamers account for over 85% share. In over two-and-half a long time, Volkswagen might nook solely 2.5% share in India’s 4.6-million-unit automobile market.
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Valuation and tax legal responsibility
The MoU will set off monetary due diligence and the method of arriving at a valuation for Volkswagen-Skoda India operations. A key concern in figuring out the valuation will probably be Volkswagen’s potential tax legal responsibility of about Rs 20,000 crore regarding an alleged circumvention of customs duties.
The customs division has alleged that the corporate imported almost full automobiles in an unassembled state however declared them as particular person parts. This, in response to customs, resulted in duties of 5-15% as an alternative of the 30-35% charges relevant to fully knocked down items. The alleged follow concerned fashions together with the Skoda Kodiaq and Excellent, Audi A4 and Q5, and Volkswagen Tiguan. Authorities have additionally alleged that shipments had been break up into smaller consignments to facilitate their clearance as particular person parts.
JSW is unlikely to imagine liabilities arising from the matter, and the potential tax publicity will subsequently must be factored into the valuation of the enterprise, individuals acquainted with the discussions stated.
Volkswagen Group is concentrating on December to take a concrete proposal to its board, they stated. The valuation and construction of the transaction will probably be firmed up in the course of the intervening interval.
Beneath the proposed construction, JSW is anticipated to make an preliminary fairness fee after agreeing on the valuation, however a considerable portion of its consideration is prone to be paid by means of a deferred construction, the individuals stated.
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The companions are additionally engaged on particulars round mannequin sharing, widespread platforms and manufacturing, apart from switch of staff and gross sales and advertising operations to the proposed entity.
The alliance might additionally considerably enhance utilisation of SAVWIPL’s manufacturing capability. Its vegetation at Chhatrapati Sambhajinagar (previously Aurangabad) and Chakan have mixed capability to supply about 400,000 automobiles a 12 months, whereas its gross sales in India are at present round 100,000 items.
The businesses are taking a look at utilizing India as an export base, significantly for electrical automobiles, leveraging the nation’s free commerce agreements with Europe and different markets.
Greater utilisation of the prevailing vegetation would enable the alliance to unfold growth and manufacturing prices throughout a bigger quantity, addressing certainly one of Volkswagen’s key challenges in India’s intensely aggressive passenger automobile market.
JSW’s entry would give the German group a neighborhood companion with manufacturing, distribution and funding capabilities, whereas permitting it to leverage its present expertise, manufacturers and manufacturing footprint within the nation. JSW MG was the third-largest EV automobile retailer in India in August, with gross sales of 4,622 items.
The event comes at a time when Volkswagen Group has initiated a broad restructuring to chop prices and tackle extra capability in Europe, together with lowering its mannequin portfolio and aligning manufacturing with demand. It stated on Tuesday it would discover choices to divest the enduring Ducati model, following a portfolio evaluation.
