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VW India Faces $1.4B Tax Row, Offers Early Retirement
10 Dec, 2025
Summary
- Volkswagen Group is offering early retirement to 2,300 workers in India.
- The automaker faces a $1.4 billion import tax demand from Indian authorities.
- The company seeks to restructure operations due to slow growth and tax issues.
Volkswagen Group is implementing an early retirement scheme for its 2,300 employees across its two Indian factories. This initiative is part of a larger strategy to restructure operations and address challenges in India's automotive market. Sources indicate the move aims to rationalize manpower and align it with current operational needs, ensuring competitive wages and sustained factory output.
The restructuring occurs while the group is contesting a substantial $1.4 billion import tax demand from Indian tax authorities, a claim Volkswagen denies. This tax dispute, coupled with a modest 2% market share despite more than two decades of presence, underscores the need for strategic adjustments.
The voluntary early retirement package offers employees 75 days of pay per year of service or remaining years until retirement. Skoda Auto Volkswagen, leading the group's India strategy, stated the scheme reaffirms their long-term commitment and was introduced at the request of worker unions.
