Investing.com -- Volkswagen expects to sign an agreement with a local partner in India this year, according to Klaus Zellmer, CEO of its Skoda brand. The German automaker continues to work toward building larger operations in the world's third-largest car market.

Skoda manages the group's strategy in India, where Volkswagen is in talks about a joint venture with JSW, India's steel-to-autos group. JSW has indicated it wants a majority stake in any potential partnership.

Zellmer said Wednesday that Volkswagen is in discussions with an unnamed partner and expects to complete a deal this year. The statement provides the clearest sign yet that a decision is approaching.

"I'm deeply convinced that our momentum can be much stronger if we have a local partner with strong roots," Zellmer told reporters on the sidelines of a Skoda event in Mumbai.

Zellmer told India's Economic Times that Volkswagen is open to giving up control of its operations in the fast-growing Indian market, which has attracted investments from global automakers.

A partner would allow Volkswagen to share investment risk in a market where its profit rose 50% as sales doubled last year. The company's scale remains limited despite more than two decades in the country. Volkswagen began searching for a partner in 2022 after talks with Mahindra did not result in an agreement.

Volkswagen needs to launch clean-energy vehicles to meet stricter emission requirements starting in 2027. Any new investment into India will require approval from Volkswagen Group's board, some of whom attended the Mumbai event.

"We brought all our VW colleagues ... to help them understand why we are so passionate about it. And it's sinking in," Zellmer said.

Volkswagen faces a $1.4 billion tax demand from Indian authorities issued in 2024 for allegedly evading import tax. The company has challenged the demand, stating it fully complied with Indian laws and regulations. The court has not yet issued an order.