Volkswagen partners with JSW Group to expand passenger vehicle production in India

JSW Group and Volkswagen Group have partnered to expand Volkswagen's production of passenger vehicles in India with an investment of around $1 billion reportedly.

According to the reports, both companies have signed a non-binding memorandum of understanding (MoU) to take their proposed 51:49 joint venture forward.

The agreement marks the beginning of exclusive negotiations over the proposed venture’s valuation and other key terms. The parties are aiming to finalise a binding agreement by December 2026.

Škoda Auto Volkswagen India Spokesperson, “India is one of the biggest drivers of the Group’s internationalisation strategy. With Skoda Auto leading the region, the Indian market is rapidly becoming a strong pillar outside Europe and a strategic hub to unlock potential in neighbouring regions and adjacent markets.”

"As part of these efforts, we have signed a non-binding Memorandum of Understanding with JSW Group to explore the key principles for a strategic partnership in India. The planned cooperation aims to strengthen competitiveness through expanded product offerings, deeper localization, and enhanced manufacturing and R&D capabilities," he added.

As per the reports, while the transaction value has not yet been disclosed, market estimates suggest that the venture could involve project investments and capital commitments of more than €1 billion, equivalent to around ₹10,000 crore.

The proposed joint venture is expected to initially bring together the eight Skoda and Volkswagen brands currently sold in India, along with future vehicle launches, including electric models.

Partnership to target mass-market vehicles

The partnership is likely to target mass-market vehicles across internal combustion engine, hybrid and electric segments. The manufacturing facilities, employees and supplier network of Skoda Auto Volkswagen India could also be brought under the proposed JV.

As part of the proposed partnership, the companies are discussing several operational aspects, including sharing of vehicle models, common platforms, manufacturing arrangements, employee transfers, and sales and marketing functions. The JV is expected to leverage Volkswagen’s manufacturing facilities in Chhatrapati Sambhajinagar and Chakan, which together have an annual production capacity of around 400,000 vehicles.

India as an export base

India could serve as an export base under the proposed alliance, with electric vehicles expected to be a key focus of the export strategy.

For Volkswagen, the partnership would provide a local partner to facilitate fresh investments and increase localisation in India. For JSW, the deal would provide a majority stake in an established passenger vehicle manufacturing business with existing production infrastructure and operations.

“In 2025, the Group - Škoda Auto Volkswagen India recorded a 36% year-over-year domestic volume growth, while brand Škoda doubled its sales in India with the strongest year-on-year gains across all Škoda markets. To fully explore the country’s growth potential, we are always considering new business opportunities,” the spokesperson added.

India’s passenger vehicle market is scaling

India’s passenger vehicle market has been on a strong growth trajectory, with domestic sales reaching a record 4.64 million units in FY26, up 7.9% year-on-year, according to the Society of Indian Automobile Manufacturers (SIAM).

The momentum has continued into FY27, with passenger vehicle sales rising 25.9% year-on-year to a record 1.27 million units in the April-June quarter.