Archive · 25 Sep 2026
JSW Seeks Volkswagen Coverage of $1.4 Billion India Tax Bill
JSW Group and Volkswagen AG are discussing a partnership to make and sell cars in India and other countries.
JSW wants to own most of the proposed combined business.
The companies have agreed on some basic parts of the deal, but they still need to settle important money questions.
One major issue is a possible $1.4 billion tax bill in India.
Indian authorities say Volkswagen paid too little import duty on some car-making kits.
Volkswagen disagrees and is challenging the tax demand in court.
JSW says Volkswagen should remain responsible for any payment.
Talks have also slowed since Klaus Zellmer left Skoda to become the head of Volvo Car AB.
JSW Group wants Volkswagen AG to cover a potential $1.4 billion Indian tax liability as a condition of their proposed partnership.
The companies have reached a preliminary agreement on the joint venture structure and commercial terms, but valuation and financial contributions remain unresolved.
JSW is seeking a majority stake in Skoda Auto Volkswagen India Pvt. to develop, manufacture and sell vehicles in India and overseas.
Indian authorities allege Volkswagen misclassified vehicle assembly kits imported between 2012 and 2024, reducing import-duty payments; Volkswagen denies the allegation and is challenging the demand in a Mumbai court.
Negotiations have slowed after Skoda chief executive Klaus Zellmer left to become CEO of Volvo Car AB, despite an earlier target of finalising a binding agreement by December.
- Who
- JSW Group and Volkswagen AG are negotiating a proposed partnership involving Skoda Auto Volkswagen India Pvt.
- What
- JSW Group wants Volkswagen AG to cover a potential $1.4 billion Indian tax liability before proceeding with the transaction.
- When
- The disputed imports date from 2012 to 2024; the court resolution is not expected before the end of the year, and the companies had been targeting a binding agreement by December.
- Where
- The proposed venture would operate in India and export vehicles overseas; Volkswagen is challenging the tax demand in a Mumbai court.
- Why
- JSW wants to avoid taking responsibility for the disputed tax liability, while Volkswagen is seeking a local partner to share investment and risks in India.
JSW Group’s Position
Volkswagen AG and Indian Authorities
Responsibility for the tax liability
JSW Group’s Position
JSW says any liability arising from the pending case should remain with Volkswagen and has indicated it would not proceed if it had to assume the financial burden.
Volkswagen AG and Indian Authorities
Indian authorities are pursuing the tax demand against Volkswagen, while Volkswagen has not agreed publicly to JSW’s proposed deal condition.
Classification of imported kits
JSW Group’s Position
JSW is seeking protection from the financial consequences of the dispute because the liability could affect the venture’s valuation and each partner’s capital contribution.
Volkswagen AG and Indian Authorities
Indian authorities allege Volkswagen misclassified imported vehicle assembly kits to reduce import-duty payments; Volkswagen denies the allegation and is challenging it in court.
Status of the partnership
JSW Group’s Position
JSW is seeking a majority stake and wants the tax issue resolved as part of the transaction’s financial terms.
Volkswagen AG and Indian Authorities
Volkswagen is pursuing a local partnership to share costs and risks and expand its relatively small presence in India, but negotiations have slowed.
- Potential tax liability
- $1.4 billion
- Proposed local partner
- JSW Group
- Volkswagen business involved
- Skoda Auto Volkswagen India Pvt.
- Proposed ownership
- JSW Group is seeking a majority stake
- Proposed vehicle portfolio
- Internal-combustion, battery-electric, plug-in hybrid and hybrid vehicles
- Tax dispute period
- Vehicle assembly kits imported between 2012 and 2024
- Expected court resolution
- Not expected before the end of the year
