JSW demands Volkswagen absorb $1.4 billion Indian tax liability in joint venture talks

JSW Group and Volkswagen have reached a preliminary accord on a joint venture that would develop, produce and market internal-combustion, electric, plug-in hybrid and hybrid vehicles for the Indian market and export. While the partnership’s commercial terms are set, the ultimate valuation depends on ongoing financial due diligence. A major unresolved issue is an Indian tax claim of roughly $1.4 billion, which the government says Volkswagen under-paid by mis-classifying imported assembly kits between 2012 and 2024.

Volkswagen is contesting the demand in a Mumbai court, with a decision unlikely before year-end. JSW has made clear it will not assume this liability, stating it could affect the venture’s valuation and capital contributions. The talks have further stalled after Klaus Zellmer, Skoda’s chief executive who was heavily involved, left to become CEO of Volvo Car AB. Both parties aim to sign a binding agreement by December despite these setbacks.