New Delhi, February 23: German automobile giant Volkswagen has sued India after the country demanded its biggest import tax of USD 1.4 billion. The company sued Indian authorities and clarified that all the necessary taxes were paid, complying with the rules. The Auto giant argued that the import taxation rules for car parts could affect its plans in India.
The tax dispute between Volkswagen’s Skoda Auto Volkswagen India unit was taken to the High Court in Mumbai, where the company said that such an ‘enormous tax’ would likely put its USD 1.5 billion investment in India at risk, per Reuters’s report. The Germany-based car company argued that the tax disputes were important to the foreign investment climate. The company shared all the details in its 105-page filing. Finance Minister Nirmala Sitharaman Announces National Manufacturing Mission To Boost ‘Make in India’ Initiative Across Industries in Union Budget 2025-26.
India reportedly slapped VW with USD 1.4 billion in import tax demand over the company’s strategy to break down imports of Volkswagen, Skoda, and Audi cars into several parts so that it could pay lower duty. In response, the Indian authorities justified that VW had imported “almost all” cars in unassembled condition to India, due to which a 30-35% tax was applied on CKDs (commonly knocked down units).
However, the company allegedly evaded the imposed taxes and misclassified them as ‘individual parts’ that were sent in separate shipments, leading to the payment of 5-15% duties. Volkswagen informed the Indian government to follow a ‘part-by-part’ import model. Being the third-largest provider of 4 million units per year in India, VW said it would remain committed to ensuring full compliance with global and local laws. Donald Trump Tariffs: Crypto Market Suffers USD 12.7 Billion Loss in Market Cap ‘Per Hour’ Since US President Announces Trade War, Says Report.
If the German automobile company lost its case against the Indian authorities, it would be liable to pay USD 2.8 billion. Volkswagen defends its position as it aims to beat Chinese rivals and cut costs. Last year, the VW announced layoffs, which affected 35,000 employees in Germany.
(The above story first appeared on LatestLY on Feb 03, 2025 04:08 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
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