Volkswagen Group and Indian conglomerate JSW Group have signed a non-binding Memorandum of Understanding (MoU) to explore a joint venture in India. This partnership aims to significantly cut manufacturing costs for Volkswagen's European exports by leveraging India as an export hub, while also providing JSW with its first automotive venture free from Chinese partnership risks. The deal is part of Volkswagen's broader global restructuring efforts to reduce expenses amidst fierce competition from Chinese automakers. The MoU was signed by JSW Green Mobility and Škoda Auto a.s., which oversees Volkswagen Group’s Indian operations. Negotiations for valuation and financial due diligence are now commencing, with both parties aiming to finalize the deal by December 2026. Market estimates suggest project investment and capital commitments for the venture could exceed €1 billion, or approximately ₹10,000 crore.
The proposed joint venture intends to develop, manufacture, and sell passenger vehicles, including internal combustion engine, electric, plug-in hybrid, and hybrid models, for both domestic sales in India and exports. For Volkswagen, the partnership offers a path to localize production, reduce costs, and gain a strong local partner to share investment. JSW will benefit from access to Volkswagen's global brand, technology, and operational know-how, along with entry into the European market facilitated by the India-EU free trade agreement. This move allows JSW to diversify its automotive portfolio, which currently relies heavily on Chinese partners, at a time when there are increasing restrictions on Chinese collaborations in India. Industry experts highlight this as a strategically coherent move for JSW, avoiding the geopolitical and investment-screening challenges associated with Chinese capital in Indian manufacturing.
The venture is expected to focus on the Volkswagen and Skoda brands in India, with luxury marques like Audi, Porsche, Lamborghini, and Bentley remaining outside its scope. The companies are discussing operations across Volkswagen Group’s Indian facilities in Chakan and Chhatrapati Sambhaji Nagar, Maharashtra. These plants have a combined annual capacity of 315,000 units but produced only around 160,000 vehicles in 2025. The partnership seeks to improve capacity utilization and localize the next generation of India-focused products. The final joint venture structure is anticipated to be 51:49, with JSW holding the majority economic interest, and the partners jointly appointing the chief executive and chief financial officer.
