JSW Group Seeks to Make Volkswagen Bear $1.4 Billion India Tax Liability in Proposed JV
New Delhi, September 25, 2026: India’s JSW Group is seeking to have Volkswagen AG take responsibility for a $1.4 billion tax liability in India as the two companies negotiate a proposed joint venture for Volkswagen’s passenger-vehicle business, according to a Bloomberg report cited by Reuters. The tax issue has emerged as one of the key unresolved matters in the negotiations.
The companies have reportedly reached a preliminary understanding on the structure and other commercial terms of the proposed partnership. However, the final valuation of the venture and the treatment of the potential tax liability remain under discussion as financial due diligence progresses.
Tax Dispute at the Centre of Negotiations
The tax demand dates back to 2024, when Indian authorities alleged that Skoda Auto Volkswagen India had misclassified and mis-declared imported vehicle assembly kits as individual parts, resulting in lower customs duties. Volkswagen has denied the allegations and is challenging the tax demand in a Mumbai court.
According to people familiar with the negotiations, JSW’s position is that any liability arising from the ongoing case should remain with Volkswagen. One source indicated that JSW would not proceed with the transaction if it were required to assume the potential tax burden.
Proposed JSW-Volkswagen Partnership
Under the proposed arrangement, JSW would invest in privately held Skoda Auto Volkswagen India and seek a majority stake. The joint venture is expected to develop, manufacture and market passenger vehicles in India and for export.
The proposed business would cover a range of technologies, including internal-combustion engines, battery-electric vehicles, plug-in hybrids and hybrids. The partnership is part of Volkswagen’s efforts to strengthen its position in India’s growing automotive market.
Volkswagen has been seeking a local partner to share investment and business risks in India. Earlier discussions with Mahindra & Mahindra did not result in a partnership.
Deal Still Faces Unresolved Issues
The $1.4 billion tax exposure could influence the valuation of the proposed venture and determine how much capital each partner ultimately contributes. Reuters said it could not independently verify the Bloomberg report, while JSW and Volkswagen had not immediately responded to requests for comment.
The companies had targeted signing a binding agreement by December, according to people familiar with the discussions, leaving the treatment of the tax dispute as an important issue in the negotiations.