JSW-Skoda Volkswagen India Sign MoU For 51:49 JV

JSW Group and Skoda Auto Volkswagen India have signed a non-binding Memorandum of Understanding to advance a proposed 51:49 joint venture covering Volkswagen's passenger vehicle business in India, The Economic Times reported.

According to multiple reports JSW is expected to hold the majority stake, with Volkswagen retaining 49 percent. The MoU opens exclusive negotiations on valuation and other deal terms, with both sides targeting a binding agreement by December 2026.

JSW-VW JV To Span Eight Brands, Use Existing Plants

The proposed venture will initially include the eight Skoda and Volkswagen brands currently sold in India, along with future launches such as electric vehicles. Audi, Porsche, Lamborghini and Bentley are set to stay outside the JV for now. JSW has left the door open to bringing these luxury marques in at a later stage. Volkswagen, for its part, wants all its brands eventually folded into the venture.

The alliance is expected to draw on Skoda Auto Volkswagen India's existing plants at Chhatrapati Sambhajinagar and Chakan, which have a combined production capacity of about 400,000 vehicles a year. Its manufacturing operations, workforce and supplier ecosystem could also become part of the JV.

Deeper localisation, an expanded product portfolio and shared manufacturing and R&D capabilities sit at the centre of the plan. The spokesperson said platform synergies are meant to support competitive product offerings, greater scale and improved profitability in the Indian market.

The partnership is expected to focus on mass-market combustion, hybrid and electric vehicles. Model sharing, common platforms, employee transfers and combined sales and marketing arrangements are also part of the discussions.

The two companies are also looking at using India as an export hub, particularly for electric vehicles. Higher utilisation of the existing plants could help spread development and manufacturing costs across larger volumes.

JV Talks Now Turn To Valuation

The final transaction value of the JV is yet to be determined, though multiple reports put put the venture's project investment and capital commitments at more than 1 billion euros, or around Rs 10,000 crore. One of the key issues weighing on that valuation is Volkswagen's potential tax liability of around Rs 20,000 crore tied to a customs duty case.

The Customs Department has alleged that Volkswagen imported nearly complete vehicles in an unassembled state while declaring them as individual components to pay lower duties. JSW is unlikely to take on liabilities from the case, so the potential tax exposure would need to be factored into the business's valuation separately.

The development also comes as Volkswagen Group carries out a broad restructuring to cut costs and address excess capacity in Europe, including trimming its model portfolio and aligning production with demand. The group said on Tuesday it will explore options to divest the Ducati brand, following a portfolio review.