Volkswagen Reshuffles India Operations Amid $1.4 Billion Tax Dispute and EV Push

Volkswagen Group is revamping its operations in India as it grapples with regulatory challenges, intensifying competition, and the country’s evolving automotive landscape, according to an internal memo seen by Reuters.

The German automaker faces a historic $1.4 billion import tax demand over alleged levy evasion, while its market share in India remains modest despite more than 20 years of presence.

Since 2018, Skoda Auto, a Volkswagen Group brand, has spearheaded the company’s strategy in India. In a September 8 memo to employees, Piyush Arora, head of Skoda Auto Volkswagen India, said the company has hired external experts to review its systems and processes, aiming to identify improvements and innovative solutions.

“Engaging a third party will provide a neutral perspective and some out-of-the-box ideas,” Arora wrote. He emphasized that Skoda remains committed to investing in new technologies and manufacturing, even as market trends shift and competition intensifies.

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The restructuring comes alongside the exit of nearly 10 senior executives, including the finance chief, HR head, and heads of quality and cost control, according to sources familiar with the departures. Skoda Auto Volkswagen India said these personnel changes align with standard HR processes and declined to provide further details.

India remains a strategic market for Skoda, particularly as Volkswagen no longer maintains a major presence in China and has exited Russia. With stricter vehicle fuel efficiency norms coming in 2027, all automakers will need to roll out electric vehicles (EVs). Currently, neither Skoda nor Volkswagen sells EVs in India.

The company plans to adapt Volkswagen’s EV technology from China for the Indian market, exploring partnerships with locally rooted firms. Skoda already has an agreement with Mahindra & Mahindra (M&M) to supply certain EV components.

A source familiar with the matter said the restructuring is designed to make the company leaner and more agile, setting the stage for future investments and allowing it to compete effectively with nimbler rivals in the Indian market.