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Volkswagen India faced custom-mades clearance delays over supposed tax evasion case, sources say

Some air shipments of cars and truck parts by Volkswagen India were briefly held up by customized authorities in Mumbai due to a $1.4 billion tax need, leading to delays in spare part materials at car dealerships, people familiar with the matter told Reuters.

The problem comes as German carmaker is trying to turn-around its sales in the world's third-largest cars and truck market with brand-new launches and planned future financial investments amid growing competitors from domestic gamers Tata Motors and Mahindra &&. Mahindra and foreign rivals Hyundai Motor.

India released a notification in September to Volkswagen's. regional system for presumably evading taxes by wilfully. mis-declaring and mis-classifying its imports and paying less. tax on elements for its Audi, VW and Skoda brand name cars and trucks.

Skoda Car Volkswagen India has previously said it. abide by all laws and guidelines and is complying with. the authorities on the allegtions.

The hold-up, consisting of more than 50 shipments of generally. extra parts, belongs to the tax call by Indian authorities,. stated 2 of the sources with direct knowledge of the matter,. including a government official.

The company was anticipated to offer some bank assurances. against the inbound air deliveries but due to the tax concern. there was an inconsistency because amount, the government official. said.

This has now been fixed, the authorities stated, without. divulging details of the amount of bank assurance.

Skoda Car Volkswagen India and the customizeds tax department. did not react to Reuters ask for comment.

The impacted deliveries primarily contained spare parts for the. group's luxury brand names such as Audi, Lamborghini and Porsche, and. were slowly launched after being held for about two weeks,. according to 2 of the sources knowledgeable about the matter.

Still, at least two cars and truck dealers in India are facing a. hold-up of numerous days in getting their consignment of spares,. the 2 sources included.

While the overall dollar worth of the delayed deliveries was. not right away clear, in 2024 Skoda Automobile Volkswagen India. imported items worth $770 million of which about 4% or $30. million was by air, according to commercially offered data. examined .

The group has less than 2% share of India's automobile market of. around 4 million systems a year.

(source: Reuters)