Even as the Adani group has found itself in legal trouble on foreign shores, the number of multinational companies found to be breaking Indian laws continues to grow longer.
India has hit German automobile maker Volkswagen with a $1.4 billion (Rs. 12,000 crore) fine for allegedly evading import duties, Reuters reports. The fine comes after Competition Commission of India had fined Meta Rs. 250 crore for misusing its dominant position while collecting data for Whatspp, and ED had raided the offices of sellers on Amazon and Walmart-owned Flipkart which were being controlled by their parent companies in contravention of Indian FDI rules.
India’s notice to Volkswagen was sent for allegedly ‘willfully’ evading $1.4 billion in taxes by paying lesser import tax on components for its Audi, VW and Skoda cars. Volkswagen is accused of importing “almost the entire” car in an unassembled condition. This helped it save taxes, because it declared those imports as “individual parts”, which attract a duty of 5-15 percent duty, as opposed to the 30-35 percent duty it would’ve had to pay otherwise.
Indian authorities had reviewed Volkswagen’s internal software, and discovered that Volkswagen India regularly placed bulk orders for cars to its suppliers in Czech Republic, Germany, Mexico and other nations. After the order was placed, the software broke it down into “main components/parts”, roughly 700-1,500 for each vehicle depending on the model. The car parts were packed abroad in different containers within a span of three to seven consecutive days under multiple invoices, and then reached the Indian port roughly at the same time, Indian authorities alleged. “This logistical arrangement is an artificial arrangement … operating structure is nothing but a ploy to clear the goods without the payment of the applicable duty,” the notice said. The imports were made by Volkswagen’s India unit, Skoda Auto Volkswagen India, for its models including the Skoda Superb and Kodiaq, luxury cars like Audi A4 and Q5, and VW’s Tiguan SUV.
Volkswagen’s shares fell 2.13% on the Frankfurt stock exchange when the news was made public. But it appears that Volkswagen will not face the kind of scrutiny in Germany that the Adani group faced in India over similar accusations of breaking the law — after the Adani group was indicted by US authorities, India’s opposition parties and some sections of its media used to news to attack Adani, and even demand his arrest. It’s unthinkable that Germany’s media and opposition will similarly attack Volkswagen over its illegal activities in India. And while India might be rapidly developing, it would do well to learn from its western counterparts on how to back its business houses when they face allegations of wrongdoing abroad.