Volkswagen eyes JSW Group partnership to boost India business

Volkswagen is exploring a strategic partnership with Indian conglomerate JSW Group to improve competitiveness and profitability in the world’s third-largest car market.

The partnership is aimed at expanding Volkswagen’s portfolio in India, deepening local sourcing and strengthening manufacturing, a company spokesperson said on Wednesday.

The proposed deal comes at a time when Volkswagen has struggled to scale its presence in India, a key market in the German automaker’s strategy to expand beyond Europe. It also highlights the challenges global automakers face in remaining competitive in India’s high-growth market.

Steel-to-energy conglomerate JSW Group entered India’s passenger vehicle market in 2023 through JSW MG Motor India, a joint venture with China’s SAIC Motor that sells MG-branded cars.

The proposed collaboration will likely be structured as a two-party partnership with joint control, defined operational roles and governance mechanisms designed to enable quicker decision-making, the spokesperson said.

The companies will also explore ways to increase local sourcing, share vehicle platforms and expand production capacity.

India has become an increasingly important market for Volkswagen, with Skoda Auto leading the group’s operations in the country. Despite being in the market for over two decades, Volkswagen’s market share is still about 2%.

Volkswagen faced a $1.4 billion tax demand from Indian authorities in 2024 for allegedly evading import taxes, which it challenged, saying it fully complied with Indian laws and regulations. The court is yet to give an order.

The automaker is under pressure from investors to accelerate cost cuts and improve competitiveness as Chinese automakers expand in Europe. It also faces tariff pressures and a prolonged slowdown in China, another important market for the company.