By Areeb Khan
JSW Group and Volkswagen Group have signed a non-binding MoU to advance a proposed 51:49 joint venture, with exclusive valuation talks now underway and a binding deal targeted by end of 2026.
Sajjan Jindal led JSW Group or Volkswagen Group ki baat karein so both companies have signed the non-binding memorandum of understanding means MoU, jiske through German carmaker ke India passenger vehicle operations ke liye proposed 51:49 alliance plan ko propose kiya jaayega. Is agreement ke saath both companies ke between valuation or other important details ke regarding exclusive negotiations bhi start ho gayi hai, or sources ke according, both sides ka target hai ki 2026 ke end tak ek final binding agreement sign kar diya jaaye. Proposed alliance ki baat karein so yeh ek new entity ke through operate karega between JSW and Volkswagen Group ki local unit Skoda Auto Volkswagen India Pvt Ltd (SAVWIPL). Yeh entity Jindal ki existing partnerships se completely seprate hogi, including China ki SAIC Motor ke saath partnership, jo India mein MG-branded cars sell karti hai. SAVWIPL spokesperson ne bhi iss development ko confirm kiya hai. Unke according, planned cooperation ka main aim competitiveness ko strengthen karna hai through expanded product offerings, deeper localisation and enhanced manufacturing and R&D capabilities. According to news portal ET ko email response mein spokesperson ne kaha ki iss cooperation ke through company apne product portfolio ko expand karne ke saath-saath localisation ko bhi deepen karegi and manufacturing or R&D capabilities ko further enhance kiya jaayega. JSW ki taraf se is matter par koi comment nahi diya gaya hai. VW ke liye yeh move ek significant step maana jaa raha hai in its more than three-year-long search for a local partner in India. Because of this partnership company local partner ke saath costs share kar payegi and at the same time India mein jo existing facilities hai unka optimal use bhi kiya jaa sakega. Yeh sab tab ho raha hai jab VW apna majority control give up karega, allowing the company to have a stronger local presence while reducing the overall cost burden. Starting with the meeting, so first aap notice kar payenge that 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. According to media reports October 2025 mein first report kiya tha that JSW had revived its discussions with Volkswagen. And after this Zellmer ne ET ko bataya that Volkswagen was open to giving majority control to a local partner, although he did not name JSW specifically. Joint venture ke scope ki baat karein so initially ismein India mein sold hone wale Skoda or Volkswagen ke eight brands ko include kiya jaayega, along with future rollouts. Other than this upcoming electric vehicles ko bhi is joint venture ke scope mein include kiya jaayega. JSW ne indicate kiya hai that it is open to bringing Volkswagen Group ke luxury marquees Audi, Porsche, Lamborghini and Bentley ko bhi alliance mein later stage par include karne ke liye. That means initially alliance mein in brands ko include nahi kiya jayega, but future mein Audi, Porsche, Lamborghini or Bentley ko bhi is partnership ka part banaya jaa sakta hai. VW bhi eventually apne all brands ko is JV (Joint Venture) ke under bring karne mein interested hai, people cited above ke according. However, because yeh brands seprately listed hai, inko is venture mein include karna thoda complicated ho sakta hai. Starting with the proposed partnership structure ki baat karein so SAVWIPL spokesperson ne kaha hai that the partnership will be based on "joint control, clearly defined roles, and mechnism designed to support swift and effective decision making." This means that both the companies will have joint control while their respective roles ko clearly define kiya jaayega. Saath hi, decision-making process ko fast and effective banane ke liye specific mechanisms bhi develop kiye jaayenge. Deep localisation or platform synergies ki baat karein so iska main aim competitive product offerings ko support karna hai, jisse Indian market mein scale ko increase kiya jaa sake or profitability ko bhi improve kiya jaa sake, person ne note kiya. Toyota ke baad world's second-largest carmaker ki baat karein so Volkswagen has been struggling to gain scale in India, jahan top four players already over 85 per cent market share ke control karte hai. India ke 4.6 million unit car market mein over two-and-a-half decades complete karne ke baad bhi volkswagen sirf 2.5 per cent market share hi corner kar paya hai. Taxes and valuation The MoU ki baat karein so this will trigger the financial due diligence process along with arriving at a valuation for Volkswagen-Skoda India operations. Valuation decide karne mein ek key issue Volkswagen ki potential tax liability bhi hone wali hai, whaich is estimated to be around Rs 20,000 crore and is related to the alleged circumvention of customs duties. Customs department ki allegations ki baat karein so unka kehna hai ki company ne nearly complete vehicle ko unassembled state mein import kiya, but in vehicles ko individual components ke form mein declare kiya gaya. Customs ke according, isse company ko sirf 5-15 per cent import duty pay karni padi, whereas completely knocked down units par applicable duty 30-35 per cent hoti hai. Is alleged practice mein Skoda Kodiaq or Superb, Audi A4 or Q5, or Volkswagen Tiguan jaise models bhi include kiye gaye hai. Authorities ka ye bhi allegation hai ki shipments ko smaller consignments mein split kiya gaya, jisse inhe individual components ke basis par clear karwana easier ho sake. JSW ke matter ko lekar baat karein so company ko is issue se arising liabilities ko assume karne ki possibility nahi hai. and because of this, potential tax exposure ko business ke valuation mein factor karna padega. Discussions se familiar people ke according, iska direct impact business ki overall valuation par dekha jaa sakta hai. Volkswagen Group ki baat karein so company December tak ek concrete proposal apne board ke saamne rakhne ka target kar rahi hai, sources ne bataya hai. Is intervening period ke during transaction ki valuation or structure ko finalise kiya jaayega, after that deal ko lekar ek clearer picture saamne aa sakti hai. Proposed structure ki baat karein so JSW se expected hai that after agreeing on the valuation, company initially ek equity payment karegi, although a substantial portion of the consideration abb deferred structure ke through pay kiya jaa sakta hai, according to people familiar with the matter. Hub for Exports Partners abb model sharing, common platforms and manufacturing ko lekar bhi details par work kar rahe hai, besides employees ke transfer ke saath-saath proposed entity mein sales and marketing operations ko shift karne par bhi work kiya jaa raha hai. Yeh alliance SAVWIPL ki manufacturing capacity utilisation ko bhi significantly improve kar sakta hai. Chhatrapati Sambhajinagar, jo pehle Aurangabad ke name se known tha, and Chakan mein company ke manufacturing plants dekhe jaa sakte hai, both plants ki combined capacity around 4 lakh vehicles per year produce karne ki hai. But currently India mein company ki sales around 1 lakh units ki hai, which means that its existing manufacturing capacity ka ek significant portion abhi fully utilise nahi ho raha hai. Companies abb India ko an export base ke form par use karne par focus kar rahi hai, particularly electric vehicles ke liye, jahan country ke free trade agreements with Europe and other markets ka benefit ka advantage liya jaa sake. Is approach ke through India se EVs ko global markets mein export karna easier ho sakta hai, while companies yahan available manufacturing capabilities ko bhi leverage karne ke efforts kar rahi hai. Existing plants ki higher utilisation ki baat karein so isse alliance ko development or manufacturing costs ko ek larger volume ke across karne mein help hogi, which could address one of Volkswagen's key challenges in India's intensely competitive passenger vehicle market. Which means existing manufacturing capacity ka better utilisation karke per-vehicle cost ko bhi manage kiya jaa sakta hai, while larger volumes ke saath overall efficiency ko improve karne ka scope bhi dekha jaa sakta hai. JSW ki entry ki baat karein so isse German group ko India mein ek local partner mil jayega with manufacturing, distribution and investment capabilities, while existing technology, brands or country mein already present manufacturing footprint ko bhi leverage kiya jaa sakega. JSW MG ki baat karein so August mein the company was the third largest EV car retailer in India, with sales of 4,622 units. This development comes at a time when Volkswagen Group has started a broad restructuring process to cut costs and address excess capacity in Europe, jismein model portfolio ko reduce karna and production ko actual demand ke saath align karna bhi included hai. After the portfolio review, company ne Tuesday ko kaha that it will explore options to divest the iconic Ducati brand, which has been an important part of the Group's portfolio. Image Sources: Nepal auto traders News Sources: ETauto