JSW, Skoda-Volkswagen India stitch up 51:49 JV plan; sign non-binding MoU, begin exclusive valuation talks

The Sajjan Jindal-led JSW Group and Volkswagen Group on Tuesday signed a non-binding memorandum of understanding (MoU) to push forward a 51:49 alliance plan for the German carmaker’s India passenger vehicles operations, multiple people in the know said. The agreement initiates exclusive negotiations over valuations and other details, with the two sides targeting a final binding agreement by the end of 2026.

The proposed alliance will operate through a new entity between JSW and Volkswagen Group’s local unit Skoda Auto Volkswagen India Pvt Ltd (SAVWIPL), separate from Jindal’s existing partnerships including with China’s SAIC Motor, which sells MG-branded cars in India.

A SAVWIPL spokesperson confirmed the development. “The planned cooperation aims to strengthen competitiveness through expanded product offerings, deeper localisation, and enhanced manufacturing and R&D capabilities,” the person said in an email response to ET.


JSW declined to comment.

The move marks a significant step in VW’s over three-year quest for a local partner in India. It will allow the company to share costs with a local partner and make optimal use of its existing facilities in India, even as it gives up majority control.

The Jindal family had held a meeting with Klaus Zellmer, chairman of Skoda Auto, Thomas Schafer, CEO of Volkswagen Passenger Cars, and member of the board of the VW Group at the JSW Mumbai headquarters on August 17.

ET first reported in October 2025 that JSW had revived discussions with Volkswagen and subsequently reported on the proposed deal in its August 5 edition. Zellmer later told ET that VW was open to ceding majority control to a local partner, without naming JSW.

The scope of the joint venture will initially include the eight Skoda and Volkswagen brands sold in India along with future rollouts, including electric vehicles.

JSW has indicated that it is open to bringing Volkswagen Group’s luxury marquees Audi, Porsche, Lamborghini and Bentley into the alliance at a later stage.

VW is also keen to eventually bring all its brands under this JV, people cited above said. However, those brands are separately listed, which could make their inclusion in the venture complicated.

The SAVWIPL spokesperson said the proposed partnership structure is based on “joint control, clearly defined roles, and mechanisms designed to support swift and effective decision making.”

Deep localisation and platform synergies are intended to support competitive product offerings, increased scale, and improved profitability in the Indian market, the person noted.

The world’s second-largest carmaker behind Toyota has been struggling to gain scale in India where the top four players account for over 85% share. In over two-and-half decades, Volkswagen could corner only 2.5% share in India’s 4.6-million-unit car market.

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Valuation and tax liability

The MoU will trigger financial due diligence and the process of arriving at a valuation for Volkswagen-Skoda India operations. A key issue in determining the valuation will be Volkswagen’s potential tax liability of about Rs 20,000 crore relating to an alleged circumvention of customs duties.

The customs department has alleged that the company imported nearly complete vehicles in an unassembled state but declared them as individual components. This, according to customs, resulted in duties of 5-15% instead of the 30-35% rates applicable to completely knocked down units. The alleged practice involved models including the Skoda Kodiaq and Superb, Audi A4 and Q5, and Volkswagen Tiguan. Authorities have also alleged that shipments were split into smaller consignments to facilitate their clearance as individual components.

JSW is unlikely to assume liabilities arising from the matter, and the potential tax exposure will therefore have to be factored into the valuation of the business, people familiar with the discussions said.

Volkswagen Group is targeting December to take a concrete proposal to its board, they said. The valuation and structure of the transaction will be firmed up during the intervening period.

Under the proposed structure, JSW is expected to make an initial equity payment after agreeing on the valuation, but a substantial portion of its consideration is likely to be paid through a deferred structure, the people said.

Export Hub

The partners are also working on details around model sharing, common platforms and manufacturing, besides transfer of employees and sales and marketing operations to the proposed entity.

The alliance could also significantly improve utilisation of SAVWIPL's manufacturing capacity. Its plants at Chhatrapati Sambhajinagar (formerly Aurangabad) and Chakan have combined capacity to produce about 315,000 vehicles a year, while its sales in India are currently around 100,000 units. The units produced 160,000 units in 2025. About 30% of total production was exported.

The companies are looking at using India as an export base, particularly for electric vehicles, leveraging the country’s free trade agreements with Europe and other markets.

Higher utilisation of the existing plants would allow the alliance to spread development and manufacturing costs across a larger volume, addressing one of Volkswagen’s key challenges in India’s intensely competitive passenger vehicle market.

JSW’s entry would give the German group a local partner with manufacturing, distribution and investment capabilities, while allowing it to leverage its existing technology, brands and manufacturing footprint in the country. JSW MG was the third-largest EV car retailer in India in August, with sales of 4,622 units.

The development comes at a time when Volkswagen Group has initiated a broad restructuring to cut costs and address excess capacity in Europe, including reducing its model portfolio and aligning production with demand. It said on Tuesday it will explore options to divest the iconic Ducati brand, following a portfolio review.