JSW and Volkswagen are discussing a possible stake dilution in Skoda Auto Volkswagen India that could give JSW rights over the Sambhajinagar manufacturing facility.
Volkswagen is seeking strict technology and intellectual property protections, particularly because JSW has an existing partnership with China's SAIC Motor through JSW MG Motor India.
Access to the existing plant could allow JSW to abandon plans for a new greenfield facility, while Volkswagen could share future investment costs and expand its presence in India.
JSW-Volkswagen Talks: China Partner SAIC Becomes Key Hurdle In India Deal
JSW Group and Volkswagen are advancing talks over a potential partnership involving Skoda Auto Volkswagen India’s Sambhajinagar plant, but negotiations remain stuck over deal structure and safeguards for Volkswagen’s proprietary technology
Volkswagen
Summary
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Negotiations between JSW Group and Volkswagen Group are advancing, focusing primarily on Skoda Auto Volkswagen India’s manufacturing plant at Chhatrapati Sambhajinagar.
The discussions have extended past an initial August 2026 target, and a revised timeline could not immediately be ascertained. The delay stems from ongoing talks regarding the transaction structure and technological safeguards, Moneycontrol reported.
Senior executives, including Volkswagen Passenger Cars CEO Thomas Schäfer and Skoda Auto CEO Klaus Zellmer, recently visited India to drive the negotiations forward.
While Volkswagen has acknowledged exploring a local partnership, its executives have not publicly identified the prospective partner.
The prospective deal could involve Volkswagen diluting its stake in Skoda Auto Volkswagen India Pvt Ltd (SAVWIPL). This move could potentially grant JSW rights over the Sambhajinagar facility, the publication reported.
Safeguards and SAIC
Volkswagen is demanding specific guarantees to secure its proprietary technology.
This caution arises from JSW's current alliance with China-based SAIC Motor, which holds a 49 per cent stake in JSW MG Motor India, while JSW Group owns 35 per cent.
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Interestingly, SAIC and the German automaker operate a long-term joint venture in China.
In 2024, the SAIC Volkswagen partnership was extended until 2040. Despite this existing relationship, Volkswagen insists on strict intellectual property protections for any technology shared under the Indian arrangement.
Parth Jindal, director of JSW MG Motor India, refrained from confirming the developments.
"As of now we have only two brands, MG and JSW. Nothing else has happened yet. It is premature for me to say anything about that," Jindal said at the launch of the JSW MG Motor Hector Tomahawk EV and plug-in hybrid. Queries sent to Jindal’s office and SAVWIPL remained unanswered at the time of publication.
Sambhajinagar Plant Implications
The Sambhajinagar factory handles premium vehicle assembly for brands like Audi, Skoda and Volkswagen. Conversely, the larger facility at Chakan, near Pune, manufactures localised mass-market cars such as the Skoda Kushaq, Slavia, Kylaq, Volkswagen Taigun and Virtus.
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Under the proposed structure, Audi and other luxury marques—including Porsche, Bentley and Lamborghini—will be carved out of the agreement. The joint venture will exclusively target the Skoda and Volkswagen brands.
Gaining access to the existing facility would allow JSW to scrap its proposed greenfield passenger vehicle factory in the same city. This move would save substantial capital investments for the conglomerate.
Currently, JSW MG Motor India runs a plant in Halol, Gujarat. The company plans to increase its annual production capacity there from 110,000 units to 400,000 vehicles, with an interim goal of doubling capacity by January 2028.
For Volkswagen, securing a domestic partner will help distribute future capital expenditure and scale operations to improve its modest market share in India.