Volkswagen has sued Indian officials over a penalty for allegedly evading US$1.4 billion (A$2.3 billion) in import taxes on its vehicles, saying this would jeopardise its investments in India.
India issued Volkswagen the notice in November, arguing Volkswagen had imported cars while disassembled and labelled them as individual parts. This would have cut potential import taxes from 30-35% to 5-15%.
“There is no exclusive utilisation of the parts towards manufacture of one specific car,” Volkswagen said in its court filing, according to Reuters.
The car company also argued that it had informed the Indian government of its plan to import cars in their individual parts, saying the penalty is “in complete contradiction of the position held by the government”.
According to Volkswagen, the penalty “places at peril the very foundation of faith and trust that foreign investors would desire to have in the actions and assurances” of India’s government.
The company may have to pay US$2.8 billion in penalties if its court challenge is unsuccessful, Reuters reported.
Volkswagen has invested US$1.5 billion in India, but is a lesser player in India’s vehicle market. Six of India’s top 10 best-selling car models in 2024 are made by Maruti Suzuki, an Indian Suzuki subsidiary, while Volkswagen does not appear in the ranking.
The company said this month that it had delivered 4.8 million vehicles worldwide in 2024, down 1.4% from last year. It did not disclose its number of deliveries in India, but Volkswagen India’s sales stood at US$2.19 billion in the 2023-2024 financial year.
Volkswagen’s share price (FWB: VOW) closed at EU€98.64 on Friday, up from its previous close at €97.82. Its market capitalisation is €49.9 billion.
