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JSW seeks Volkswagen cover for $1.4 billion India tax liability in proposed JV

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JSW seeks Volkswagen cover for $1.4 billion India tax liability in proposed JV

JSW seeks Volkswagen cover for $1.4 billion India tax liability in proposed JV

The unresolved tax exposure could affect the venture’s valuation and the partners’ eventual capital contribution.

The proposed JSW-Volkswagen alliance follows nearly two years of efforts by Volkswagen to find a local partner in India after its earlier discussions with Mahindra & Mahindra ended.

JSW Group is seeking to have Volkswagen AG bear a $1.4 billion tax liability in India as the two companies negotiate a proposed joint venture for the German automaker’s passenger vehicle business, people familiar with the matter told Bloomberg . The tax issue has emerged as a key unresolved matter even as the two companies have reached a preliminary understanding on the joint venture structure and other commercial terms. The final valuation remains crucial as financial due diligence gets underway, the people said, asking not to be identified because they are not authorised to discuss the negotiations. Advt

The proposed venture involves JSW investing in privately held Skoda Auto Volkswagen India Pvt Ltd (SAVWIPL), with the Sajjan Jindal-led group seeking a majority stake. The partnership is proposed to develop, manufacture and market passenger vehicles in India and for export, covering internal-combustion engine, battery-electric, plug-in hybrid and hybrid vehicles. Tax liability becomes key sticking point The tax exposure stems from an Indian government allegation that Volkswagen misclassified vehicle assembly kits imported from countries including Germany, the Czech Republic and Hungary between 2012 and 2024, resulting in lower customs levies.

Volkswagen has denied the allegations and is challenging the tax demand in court in Mumbai.


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