Skoda Auto expects to conclude its search for an Indian partner this year, global CEO Klaus Zellmer said, indicating that negotiations over the Volkswagen Group's next phase of operations in the country are approaching a decision.

"We are in discussions. I'm deeply convinced that our momentum can be much stronger if we have a local partner with strong roots," Zellmer told members of the media on the sidelines of the Slavia launch in Mumbai on August 18th. "But it has to be complementary."

A partnership would provide the Volkswagen Group with additional capital and local capabilities as it expands its product portfolio, develops electric vehicles and increases its engineering and manufacturing operations in India. Zellmer said the company was evaluating the discussions because the choice of partner would have long-term implications.

"If you choose a partner for life, you need to choose carefully. You need to lay out what you're in for," he said. "This is the process we're in. But I'm confident that this year we're going to nail it."

His comments indicate that Skoda expects the partnership negotiations to conclude in 2026. Asked whether majority ownership was important, Zellmer said: "It does. You need somebody to have a clear say." He did not elaborate on the proposed structure.

Media sources had reported that Skoda Auto Volkswagen India, the group's local unit, is in talks with the JSW Group for a potential alliance, with JSW likely to hold a majority stake. A capital infusion from a joint venture partner would help fund the group's India plans, share the investment required for new products and support the localisation of future vehicle architectures and technologies.

Global boards review India roadmap

The global boards of Skoda Auto and Volkswagen have separately visited India to review local operations and their respective market roadmaps, as the country remains part of the Volkswagen Group's plans for products, technology and investment.

"We brought all our VW colleagues over. They're also here, in order to help them understand why we are so passionate about India," Zellmer said.

Asked whether the wider Volkswagen Group had supported the vision for India, he replied: "They have."

This will be relevant as Skoda Auto Volkswagen India prepares to expand beyond its current locally manufactured petrol-powered range, with the next phase expected to require investment in electric vehicles, product development, engineering and manufacturing.

EUR 2 billion programme takes shape

Media sources reports that the Volkswagen Group, led by Skoda Auto, is likely to invest around EUR 2 billion (US$ 2.31 billion) in India over the coming decade across multiple projects, including the localisation of its China Main Platform, or CMP, which will be adapted for the Indian market.

A localised CMP could underpin a new generation of electric vehicles for Skoda and Volkswagen. Investment from a joint venture partner could support localisation of the architecture and provide the scale required for the programme.

The investment is expected to be spread across several projects over the coming decade rather than made as a single commitment, with its final scope and timing dependent on the partnership structure and approvals from the companies involved. The programme would provide both brands with a locally adapted electric vehicle architecture as they expand beyond their petrol-only, locally manufactured portfolios.

India's engineering operations expand

As partnership discussions continue, Skoda has increased development work in India and expanded its local engineering base. Zellmer said the company was increasing its number of engineers in India "dramatically" as more future development projects were transferred to the country.

"We're really using the momentum that this country is creating," he said.

The Kylaq compact SUV has been used as a reference for Skoda's local product strategy. Developed for India and positioned in the country's largest passenger vehicle segment, it has expanded the brand's presence in that segment.

"When we talk about India for India, the Kylaq is the best example," Zellmer said. "It's a car that carries our spirit, our engineering capabilities and our ambition, but it also carries the cultural values."

Asked whether Skoda would develop more products locally along the lines of the Kylaq, Zellmer said: "Yes," but did not disclose details.

The Kylaq's performance and the expansion of Skoda's India business have supported plans to give the local operation greater responsibility.

"If you put your mind to it and put the responsibility into the right people's hands, business is local," Zellmer said.

An agreement this year would determine how the Volkswagen Group funds its next phase of operations in India and provide a basis for developing the two brands' next generation of locally developed products.