Volkswagen Group is preparing a major overhaul of its India strategy through a proposed joint venture with the JSW Group, with two locally assembled battery-electric vehicles planned to be introduced within two years. The partnership is expected to combine Volkswagen’s technology, brands and engineering capabilities with JSW’s manufacturing scale and local investment capacity as the German automaker looks to improve its competitiveness in India’s rapidly expanding electric-vehicle market.
The proposed alliance follows a non-binding memorandum of understanding signed by JSW Group and Volkswagen Group’s local unit, Skoda Auto Volkswagen India. The companies are negotiating a potential 51:49 structure, with JSW expected to hold the larger stake, although ownership and commercial terms remain subject to further discussions, approvals and regulatory clearances. The companies are targeting a binding agreement by the end of 2026 or around mid-2027, according to recent reports.
Volkswagen and JSW Plan Two Local EVs
The proposed partnership is expected to accelerate Volkswagen Group’s long-delayed EV strategy in India.
Skoda Auto acting CEO Holger Peters told employees that the group plans to introduce two locally assembled battery-electric vehicles within two years. The vehicles are expected to benefit from deeper localisation and greater use of existing manufacturing infrastructure.
The plan represents a significant shift for Volkswagen, which has been cautious about launching locally produced EVs in India while assessing the investment required to make electric models competitive.
Proposed EV Strategy at a Glance
| Area | Plan |
|---|---|
| Partners | Volkswagen Group and JSW Group |
| Proposed structure | 51:49 under discussion |
| Two EVs | Locally assembled BEVs |
| EV timeline | Within two years |
| Key technology | India Main Platform |
| Manufacturing | Existing JSW/VW facilities under evaluation |
| Focus | Localisation, scale and profitability |
| Export potential | India as a regional EV hub |
The final vehicle names, specifications and pricing have not yet been officially confirmed.
Why Volkswagen Needs a Local Partner
Volkswagen has struggled to gain the scale it wants in India’s passenger-vehicle market.
The group sells vehicles under brands including Volkswagen and Skoda, but its overall volumes remain significantly smaller than those of India’s leading manufacturers.
Recent reports indicate that India’s top four passenger-vehicle manufacturers account for more than 85% of the market, making scale and cost competitiveness particularly important for international automakers.
A local partner can potentially help Volkswagen reduce costs, improve supplier localisation and use manufacturing capacity more efficiently.
JSW brings another important advantage: experience in manufacturing, infrastructure, investment and its expanding automotive operations.
JSW Could Hold Majority Stake
The proposed structure is being discussed as a 51:49 partnership, with JSW expected to hold the majority stake.
However, the companies have emphasised that the proposed arrangement would involve joint control and clearly defined responsibilities.
The exact ownership structure and commercial terms have not yet been finalised.
For Volkswagen, giving a local partner a majority position would represent a significant change in its India strategy.
For JSW, meanwhile, the partnership would expand its presence in passenger vehicles and give it access to Volkswagen Group’s global technology, platforms and brands.
India Main Platform Could Power New EVs
A key part of the proposed strategy is Volkswagen Group’s India Main Platform (IMP).
The architecture is reportedly derived from the group’s China Main Platform and is intended to be adapted for Indian regulations, suppliers and localisation requirements.
The platform could underpin multiple electric SUVs for the Volkswagen and Skoda brands.
The goal is to spread development and manufacturing costs across several models rather than developing each vehicle independently.
How Localisation Could Lower Costs
Global EV platform
↓
Adapted for Indian requirements
↓
More local components
↓
Higher production volumes
↓
Lower per-unit costs
This approach could make Volkswagen’s EVs more competitive in India’s price-sensitive market.
Existing Plants Could Be Used for EV Assembly
The proposed partnership could also reduce the need for Volkswagen to immediately build a completely new EV manufacturing line.
JSW has reportedly offered its existing facilities for possible assembly of Volkswagen and Skoda electric vehicles.
These include the JSW Motors plant at Chhatrapati Sambhajinagar in Maharashtra and the JSW-MG Motor facility at Halol in Gujarat.
Using existing facilities could accelerate production while reducing upfront capital requirements.
It could also help both companies improve utilisation of manufacturing assets.
Volkswagen Has Significant Unused Capacity
The partnership comes at a time when Volkswagen’s Indian manufacturing operations have substantial capacity relative to current sales.
Its plants at Chhatrapati Sambhajinagar and Chakan have combined production capacity of roughly 315,000 vehicles annually, while sales in India have been around 100,000 units, according to recent Economic Times reporting. Production reached around 160,000 units in 2025, with roughly 30% of output exported.
Increasing utilisation would allow the companies to spread fixed manufacturing and development costs across a larger number of vehicles.
That could become particularly important for EVs, where battery technology and platform development can require significant investment.
Exports Could Become a Major Part of the Strategy
The proposed venture is not limited to India’s domestic market.
The companies are also considering India as an export base for vehicles, including electric models.
This could give Volkswagen access to India’s growing manufacturing ecosystem while allowing it to use existing trade agreements to serve overseas markets.
For JSW, an export-oriented automotive business would fit into its broader strategy of developing manufacturing capabilities that can serve both domestic and international markets.
Potential India-to-Global Model
Indian manufacturing
→ Local suppliers
→ Lower production costs
→ Higher volumes
→ Export vehicles
→ Global markets
If successful, the strategy could transform India from primarily a sales market into a larger manufacturing and export hub for Volkswagen Group.
EV Competition in India Is Intensifying
Volkswagen and JSW are entering a market where competition among electric-vehicle manufacturers is rapidly increasing.
Tata Motors remains a major player in India’s electric passenger-vehicle market, while Mahindra, Hyundai, Kia, MG Motor, BYD and other manufacturers are expanding their EV offerings.
JSW itself already has exposure to the electric-car market through its partnership with SAIC Motor under JSW MG Motor India.
That business has established JSW as an increasingly important participant in India’s EV industry.
The proposed Volkswagen partnership would give the group another route into electric passenger vehicles, this time using Volkswagen Group technology and brands.
The Partnership Covers More Than EVs
Although the immediate attention is on the two electric vehicles, the proposed JV is broader than an EV-only arrangement.
The companies are discussing development, manufacturing and sales of passenger vehicles across multiple powertrains, including internal-combustion engines, hybrids, plug-in hybrids and battery-electric vehicles.
The broader product scope could eventually allow the partnership to optimise manufacturing capacity across different vehicle categories.
It also gives Volkswagen greater flexibility as India’s automotive market transitions from internal-combustion vehicles toward electrification.
Localisation Will Be Critical
The biggest economic objective of the partnership is likely to be localisation.
Imported components and completely built-up vehicles can make EVs expensive in India.
Increasing local sourcing can reduce logistics costs and improve protection against currency fluctuations and import-related expenses.
The companies are therefore expected to work on deeper supplier localisation alongside manufacturing and R&D capabilities.
The proposed partnership is specifically aimed at strengthening localisation, expanding the product portfolio and improving manufacturing competitiveness.
Volkswagen’s India Strategy Gets a Reset
The JSW partnership marks a major change in Volkswagen’s approach to India.
The company had previously explored partnerships with other Indian automakers, including discussions with Mahindra & Mahindra.
The new alliance gives Volkswagen a local industrial partner with significant financial and manufacturing capabilities.
At the same time, JSW gets access to a global automotive group with established brands, engineering expertise and international distribution networks.
The combination is designed to address the two biggest challenges facing the businesses: Volkswagen’s need for scale and JSW’s need for technology and established global automotive brands.
The Bigger Picture
The proposed Volkswagen-JSW partnership reflects a broader transformation in India’s automobile industry. Global automakers increasingly need local manufacturing, supplier networks and competitive pricing to succeed in the country, while Indian industrial groups are seeking technology partnerships to accelerate their entry into new-energy vehicles.
The plan for two locally assembled EVs within two years could therefore be more significant than the launch of two individual models. If the partnership proceeds, it could create a larger manufacturing ecosystem around Volkswagen and Skoda vehicles, increase localisation, improve factory utilisation and potentially turn India into an export base for electric vehicles.
Looking Ahead
The immediate focus will be on finalising the proposed JV’s ownership structure, valuation, manufacturing arrangements and regulatory approvals. The companies will also need to decide which facilities will assemble the new EVs and how much of the vehicles’ components can be sourced locally.
For Volkswagen, the partnership offers a route to accelerate its India EV plans without relying entirely on new standalone investments. For JSW, it could strengthen an increasingly diversified automotive business spanning passenger vehicles, EVs, manufacturing and exports. The ultimate test will be whether the alliance can translate Volkswagen’s technology and JSW’s local scale into electric vehicles that are competitive on price, range and features in India’s increasingly crowded EV market.
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