Volkswagen expects to conclude a tie-up with a local partner in India this year, Klaus Zellmer, chief executive of Skoda, said on Wednesday, signaling a possible acceleration of the carmaker’s plans to scale in the country.
Skoda is overseeing the Volkswagen Group’s India strategy, and the automaker has been engaged in talks about forming a joint venture with JSW, the Indian conglomerate that spans steel and autos. JSW has indicated it would seek a majority position in any such partnership.
"I'm deeply convinced that our momentum can be much stronger if we have a local partner with strong roots," Zellmer told reporters at a Skoda event in Mumbai, providing what appears to be the clearest suggestion yet that a decision is approaching.
Zellmer also said Volkswagen is in talks with an unnamed partner and expects the process to be completed within the year. He told India’s Economic Times that the company is open to ceding control of its Indian operations as it pursues broader growth there.
Why a partner matters
For Volkswagen, a local partner would help share the financial burden of expanding in India, a market where the company’s profits rose 50% as sales doubled over the previous year. Despite operating in India for more than two decades, Volkswagen’s scale in the market has remained limited, which has driven the search for a tie-up since talks with Mahindra in 2022 did not produce an agreement.
Any new investment in India would need approval from the Volkswagen Group board. Zellmer said some board members attended the Mumbai event, underscoring the level of group attention on the region.
"We brought all our VW colleagues ... to help them understand why we are so passionate about it. And it's sinking in," Zellmer said.
Regulatory and operational pressures
Volkswagen will face stricter vehicle emission requirements beginning in 2027, creating an imperative to introduce cleaner vehicles in the Indian market. The timeline for new clean-energy models is a factor in the company’s deliberations about committing fresh capital to India.
Meanwhile, Volkswagen is contesting a tax demand from Indian authorities issued in 2024 that seeks $1.4 billion, alleging import tax evasion. The automaker has challenged the claim, maintaining that it complied with Indian laws and regulations. The dispute remains unresolved in the courts.
Next steps and context
Skoda’s role in shaping Volkswagen’s India approach positions it at the center of the discussions over the prospective partner, the scale of future investments, and the timing for launching clean-energy models to meet upcoming emission rules. The company’s intention to finalize a deal this year suggests the group is moving toward a clearer operational posture in India, even as legal and regulatory questions persist.