The potential joint venture between Indian conglomerate JSW Group and German auto giant Volkswagen Group will focus on cutting costs through supplier synergies and using India as an export hub for Europe to counter competition from Chinese carmakers, according to two executives in the know. It would also help de-risk JSW’s auto portfolio, which is heavily reliant on China, experts said.
The two sides signed a non-binding memorandum of understanding (MoU) on Tuesday to explore establishing the joint venture in India. This coincides with a broader global restructuring at Volkswagen Group to pare down costs. The MoU was signed by JSW Green Mobility—the primary entity through which the conglomerate is building its automobile business—and Czechia-based Škoda Auto a.s., which leads Volkswagen Group’s operations in India.
However, the two people cited above said formal negotiations regarding valuation and financial due diligence would begin only now, with both sides aiming to close the deal by December 2026.
The Volkswagen Group operates six distinct brands in India: Volkswagen Cars, Skoda, Porsche, Lamborghini, Audi and Bentley. They are all housed under Skoda Auto Volkswagen India Pvt Ltd, which reported a 48% jump in net profit to ₹139 crore in FY26, and an 11% revenue increase to ₹22,338 crore, according to its filings with the ministry of corporate affairs dated 24 July. The strong performance came as retail sales of its largest Indian brand, Skoda, surged 68% during the financial year, aided by the success of the Kylaq SUV.
Despite operating in India for over two decades, Volkswagen’s market share remains in the low single digits. The automaker held a 2.3% retail market share in FY26, according to data from the Federation of Automobile Dealers Associations (Fada).
This isn’t the first time the Volkswagen Group has come close to partnering with Indian companies, after previous attempts with Tata Motors (in 2017) and Mahindra & Mahindra (in 2024) fell through. Economic Times the signing of the MoU on Wednesday morning.
Chinese tie-ups
The two executives cited above and industry experts said while the deal could help Volkswagen trim costs amid fierce competition from Chinese rivals, it would also allow JSW to access the European carmaker’s technology, as it currently relies on Chinese partners across its two other ventures.
The Sajjan Jindal-led group is preparing to enter the passenger vehicle segment through JSW Motors, which has a model-sourcing deal with Chinese carmaker Chery. Its other auto business, JSW MG Motor India, is a joint venture with Chinese state-owned SAIC, in which JSW holds a 35% stake.
The first executive cited above said the conglomerate is looking to run all three auto ventures—JSW MG Motor, JSW Motors, and the proposed JSW-Volkswagen joint venture—as separate entities.
Industry experts noted that this would be the Jindal group’s first automotive partnership without a Chinese firm. It would allow JSW to diversify at a time when the sector faces growing curbs on Chinese collaborations—a hurdle that recently forced the group to pause its 50 GWh lithium-ion cell factory due to tech-transfer restrictions by Beijing.
“This is one of the more strategically coherent JSW automotive bets. Unlike the Chery-linked JSW Motors venture, this one carries no China exposure. That matters, given the current geopolitical and investment-screening climate around Chinese capital in Indian manufacturing,” said Vinay Piparsania, founder at MillenStrat Advisory and Research.
What’s in it for both
The executives cited above said the two companies are currently discussing operations across both of Volkswagen Group’s Indian facilities, located in Chakan and Chhatrapati Sambhaji Nagar, Maharashtra.
“For now, the partnership involves only the Volkswagen and Skoda brands in India, and not Audi and the group’s other marquees. The partners would jointly appoint the chief executive and chief financial officer,” said the first executive cited above.
“The main purpose of the deal from their (Volkswagen’s) side is the cost,” one of these executives said. “Volkswagen has been in India for two decades and has strong brand recall but needs a local partner to localize production and bring costs down,” this person added.
From JSW’s perspective, the executives noted, the alliance offers access to a global brand, technology, and operational know-how, along with entry into the European market via the free trade agreement () signed between India and the European Union earlier this year.
“The joint venture can make the cars in India and export them to Europe. Lower Indian costs, on this logic, become a weapon against Chinese manufacturers in Europe,” said the first executive.
A spokesperson for Volkswagen Group and JSW Group said in a statement shared with Mint that both sides were looking to expand their product offerings, deepen localisation, and increase manufacturing heft.
A JSW spokesperson said in a statement that the proposed joint venture would develop, manufacture, and sell passenger vehicles—spanning internal combustion engine, electric, plug-in hybrid, and hybrid models—for both domestic sales and exports.
“The idea is to bring together two complementary strengths. Škoda Auto is one of the world’s established automobile manufacturers, with deep engineering and product capability. The brings manufacturing scale, execution experience and a presence across steel, infrastructure, energy, cement, paints and automotive in India,” the JSW spokesperson said.
“At this stage, the MoU is exploratory and non-binding. The two companies are in early discussions, and there is no definitive agreement yet. Any firm arrangement would follow further negotiation, internal approvals and the necessary regulatory clearances,” the spokesperson added.
A spokesperson for Skoda Auto Volkswagen India Pvt Ltd said the partnership may look to unlock various synergies. “To fully explore the country’s growth potential, we are always considering new business opportunities. 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 spokesperson said.
“The planned cooperation aims to strengthen competitiveness through expanded product offerings, deeper localization, and enhanced manufacturing and R&D capabilities. It is based on a two-party partnership structure with joint control, clearly defined roles, and mechanisms designed to support swift and effective decision making,” the spokesperson added.