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Volkswagen Restructures Indian Operations Amid Tax Dispute, EV Transition Plans

Automobile

BusinessHonor - Volkswagen India Restructures Amid EV Shift

Business Honor
29 September, 2025

Volkswagen plans for major changes in Indian operations due to tax issues, weak market presence, and increased competition, shifting towards electric vehicles by 2027.

The Volkswagen Group plans to restructure its activities in India due to the rising issues, like major tax disputes, weak market presence, and increased competition. Skoda Auto Volkswagen India started a significant study to improve performance and get prepared for the future of electric vehicles (EVs), according to an official letter acquired by Reuters.

The biggest case of its kind in India, the German automaker faces a $1.4 billion tax demand due to alleged import duty fraud. Even though it has been in business in the nation for more than 20 years, its market share remains fixed at only 2%. Skoda Auto has been in charge of the group's India strategy since 2018. The business has now hired independent experts to examine its procedures and offer suggestions for improvements. "A balanced perspective will bring fresh thoughts," Piyush Arora, the managing director, claimed, encouraging employees to support the improvement.

Around ten senior executives, including those in senior roles in quality management, finance, and human resources, recently left the company, leading to the present change. Volkswagen is still committed to India, though. It plans to introduce EVs in 2027 as tougher fuel efficiency regulations are implemented. In order to support its EV drive, the business has a part supply agreement with Mahindra & Mahindra and is interested in adopting EV technologies from its China operations.

Profits decreased quickly to $10.6 million in 2024 from $85 million in 2020, with revenue having almost tripled in five years to $2.15 billion, highlighting the need for change. Volkswagen is presently at a crossroads and must choose its next major investment in India. If successful, the change would make the automaker a more flexible, electric vehicle-focused player in one of the auto markets with the fastest rates of growth in the world.