India, Volkswagen clash in court over record $1.2 billion tax dispute

[Nan Yang]

India, Volkswagen clash in court over record $1.2 billion tax dispute​

By Aditi Shah
October 29, 2026 6:40 AM PDT Updated October 29, 2026

Volkswagen Taigun compact SUV car is on display after it was unveiled at an event in New Delhi, India, February 3, 2020. REUTERS/Anushree Fadnavis/File Photo Purchase Licensing Rights, opens new tab

• Summary
• Companies

• Court case continues over India's biggest ever import tax demand
• India says VW never provided information on time, can’t blame officials
• VW says the law lets authorities go back only five years, not 12
• Dispute weighs on VW as it holds stake sale ‌talks with JSW

MUMBAI, Oct 29 (Reuters) - India defended its record $1.2 billion tax demand against Volkswagen (VOWG.DE), opens new tab in a Mumbai court on Thursday, saying the German company never provided required information in time, while the carmaker argued the demand came years too late.

India has since 2024 alleged Volkswagen undervalued auto imports for years and paid below the full tariff rates. ⁠The case is a major overhang for the carmaker which is currently in talks with India's JSW to sell a stake in its India operations.

Volkswagen, which has a roughly 2% market share in the world's third biggest car market, denies the allegations, and has previously said the case is a matter of "life and death" for its India business, and is "impossibly enormous".

The dispute over India's biggest ever import tax demand restarted last week after the High Court in Mumbai said in August it would hear Volkswagen challenge afresh as judges failed to pass a ruling in time.

On Thursday, Volkswagen's ‌counsel ⁠Arvind Datar told the judges India tax authorities could not have gone back 12 years in scrutinising its imports as Indian law allows officials to only go back up to the past five years.

Additional Solicitor General N. Venkataraman, one of the government's top lawyers, said Volkswagen didn't provide the information sought ⁠in time, adding that no other automaker in the country which imports parts had indulged in such misconduct.

"No other company has challenged this," he said.

Volkswagen is accused of declaring its imports as individual auto parts ⁠and paid 5% to 15% tariff, though it was bringing in "almost the entire car" in unassembled condition for which it should have paid a 30-35% tax rate, India has alleged.

The ⁠investigation has spooked foreign investors, as lengthy import tariff and tax cases have long been a sore point for companies and affected companies like Samsung and LG.

The case will next be heard on Tuesday next week.

Writing by Arpan Chaturvedi and Aditya Kalra; Editing by Susan Fenton