Industry Odisha Bureau, Sep 09: JSW Group and Volkswagen have signed a non-binding MoU. The agreement proposes a 51:49 India joint venture. Exclusive negotiations on valuation and terms have now begun. Multiple people familiar with the matter confirmed the development.
The MoU itself does not finalize any transaction. Both companies still need to agree on valuation. They are targeting a binding agreement by end-2026. A SAVWIPL spokesperson confirmed the development in a statement.
The proposed alliance would operate through a new entity. JSW would hold 51%, with Volkswagen holding 49%. This would sit separate from JSW’s existing MG partnership. The structure aims for joint control and clear roles.
Volkswagen has sought greater scale in India for years. It currently holds about 2.5% of the market. India’s passenger vehicle market totals roughly 4.6 million units. Four manufacturers together control more than 85% of sales. Volkswagen has sought a local partner for over three years.
The proposed cooperation aims to deepen local manufacturing. It also targets stronger R&D and platform sharing. Such steps could help spread development costs further. Common vehicle platforms are also part of the plan.
Skoda Auto Volkswagen India operates plants at Chakan. Another plant sits at Chhatrapati Sambhajinagar, formerly Aurangabad. Combined capacity stands at about 400,000 vehicles yearly. Current sales in India remain closer to 100,000 units. That gap highlights room for higher factory utilisation.
The partners are examining India as an export base. Electric vehicles could become an important export category. India’s trade agreements with Europe could support that plan. No specific export volumes have been disclosed publicly.
Future products under the venture could include electric vehicles. JSW MG was India’s third-largest EV retailer in August. It sold 4,622 units during that month. Luxury brands like Audi and Porsche could join later.
Signing the MoU triggers formal financial due diligence. Valuation for Volkswagen’s India operations remains under discussion. Volkswagen aims to present a proposal to its board by December. The transaction structure will also be finalized meanwhile.
A key valuation issue involves a disputed customs matter. Authorities have alleged Volkswagen understated import duties on vehicles. The alleged liability totals about ₹20,000 crore. Models named include the Skoda Kodiaq and Volkswagen Tiguan. These remain allegations, not established findings against the company.
JSW may make an initial equity payment upfront. Further consideration could follow a deferred payment structure. JSW is reportedly unlikely to assume disputed legacy liabilities.
India’s passenger vehicle market remains intensely competitive overall. A stronger local partner could help Volkswagen compete better. JSW brings manufacturing, distribution and local market experience.
Execution now depends on valuation and negotiation progress. Localisation and higher factory utilisation remain central goals. Turning the proposal into a signed deal remains the challenge. Volkswagen is separately reviewing its global brand portfolio.
