Volkswagen AG has halted investments in an electric-vehicle program for India until it gains clarity on a potential partnership with billionaire Sajjan Jindal’s JSW Group. The pause follows an announcement last month by both companies that they are exploring a venture to develop, build and market passenger vehicles in India.

Volkswagen has finished design work using a low-cost EV architecture originally developed for China, positioning it to scale quickly once talks conclude. However, the German group is withholding additional capital until the partners establish a firmer business plan.

The investment hold comes amid a worldwide cost-cutting drive that aims to trim group investments by about 15% and cut tens of thousands of jobs. VW had already reduced the costs of developing EVs in India by a third last year as it searched for a partner, and it currently sells no battery-powered cars in the country under either its namesake or Skoda brands.

Spending cuts at headquarters are dictating the local timetable. Volkswagen is trimming its worldwide capital investments by roughly 15 per cent and eliminating tens of thousands of jobs as it grapples with weak deliveries across Europe and aggressive competition from Chinese producers.

Those international pressures prompted management to slash its projected Indian EV development budget by a third last year while searching for a local equity partner. The spending freeze now leaves the automaker without an electric passenger vehicle on sale in India under either the Volkswagen badge or Skoda.

The delay hands an open field to domestic incumbents and new Asian competitors.

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