VW Seeks Local Indian Partner to Drive Scale and Share Investment Risks

Volkswagen (VW) Group expects to finalize a deal with a local Indian partner this year to accelerate its momentum in the world’s third-largest auto market. According to Klaus Zellmer, CEO of VW’s Skoda brand—which oversees the group’s strategy in India—having a partner with strong local roots will strengthen their position and help fund the next phase of growth. The German automaker is seeking fresh capital to launch clean-energy vehicles ahead of stricter emission norms taking effect in 2027, as well as to share investment risks after struggling to achieve meaningful scale despite over two decades in the country.

Although Zellmer did not name the entity, VW is reportedly in talks with India’s steel-to-autos conglomerate JSW Group for a joint venture. Sources indicate JSW is seeking a majority stake, and Zellmer confirmed that VW is open to ceding control of its local operations to secure a deal. A previous attempt by VW to form a partnership with Mahindra in 2022 did not materialize. Analysts note a higher likelihood of success with JSW, which is aggressively expanding its automotive portfolio following existing ventures with Chinese carmakers SAIC and Chery.

The move to bring in a local partner comes as the global automaker faces broader operational and financial headwinds. Domestically, VW is currently battling a $1.4 billion tax demand from Indian authorities over alleged import tax evasion, a charge the company is challenging in court. Globally, the group is facing pressure from investors to cut costs and improve competitiveness amid a sales slowdown in China, rising European expansion by Chinese rivals, and looming trade tariffs.

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