JSW and Volkswagen have agreed in principle on the JV's structure and several commercial points, people with knowledge of the negotiations said. With due diligence underway, how the venture is valued is still a swing factor.
The talks center on JSW investing in Skoda Auto Volkswagen India Pvt., a privately held unit, with the Sajjan Jindal-led group aiming for majority control. As outlined in a joint statement earlier this month, the planned venture would develop, produce and market passenger cars in India and for export, spanning internal combustion, battery electric, plug in hybrid and hybrid models.
Skoda Auto Volkswagen India and JSW Group did not immediately reply to emailed requests for comment.
At issue is JSW's push for VW to keep any potential $1.4 billion tax hit on its own books, the people said. The Indian government alleges that between 2012 and 2024 Volkswagen misclassified certain imported vehicle assembly kits from countries including Germany, the Czech Republic and Hungary, reducing the levies due. VW has denied the allegation and is challenging the demand in a Mumbai court, with a decision there not expected until after year-end.
According to the people, leaders at JSW maintain that any liability from the case should stay with the German automaker. One person said JSW has indicated it would not move ahead if required to assume that burden, a stance that could affect asset valuation and the amount of capital each party ultimately contributes.
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The impasse lands alongside leadership movement. Earlier this month Klaus Zellmer left as Skoda's chief executive to become CEO of Volvo Car AB. He had played a central role in the India negotiations, and in August he said he anticipated sealing a deal with JSW before year-end. The combination of his departure and the unresolved tax issue has tempered the momentum of talks, the people said.
Both sides had aimed to sign a binding agreement by December, but discussions would need to pick up to meet that target.
Volkswagen has spent nearly two years hunting for a local partner after talks with Mahindra & Mahindra Ltd. fell through, part of a broader turnaround push for the Wolfsburg-based company. Despite years of investment in Indian manufacturing and models tailored for the market, VW's presence in India via Skoda Auto remains small. If the JSW deal lands, the venture is slated to design, build and sell cars in India and for export across multiple powertrains, which could broaden choices and competition for Indian car buyers. For investors, the open questions are timing and terms, with the court case and leadership change now central to how quickly this moves.
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