Nokia was forced to keep its Chennai unit out of a $7.5 billion deal for sale of its handset business to Microsoft due to a tax dispute with Indian authorities
The Indian government on Wednesday said it will look into the issue of Nokia announcing suspension of its Chennai mobile plant operations and make efforts to ensure that such incidents do not occur again.
“We will certainly see how best (such) matter doesn’t occur again and we will encourage ‘Make In India’ campaign,” Commerce and Industry Minister Nirmala Sitharaman said.
Sitharaman, who is also Minister of State for Finance and Corporate Affairs, was responding to queries on Nokia announcing suspension of its plant and whether it will affect the government’s recently launched ‘Make In India’ campaign.
“This is an issue specifically related to a particular company and there is an issue on that. We are seized of the matter. We will look at it,” she said.
On Tuesday, telecom handset maker Nokia Corp announced suspension of operations at its Chennai mobile handset plant from 1st November after Microsoft terminated an agreement to buy mobiles from the unit.
The company had said that the asset freeze imposed by the tax department prevents Nokia from exploring potential opportunities for the transfer of the factory to a successor to support the long-term viability of the established, fully functional electronics manufacturing ecosystem.
The Finnish handset maker was forced to keep the factory out of a $7.5 billion deal for sale of its handset business to Microsoft Corp, due to tax dispute with Indian authorities.
Tax authorities allege that Nokia avoided paying taxes by wrongfully claiming an exemption on software exports. Nokia has challenged the claims of the tax department in courts.
Nokia started manufacturing at Chennai plant in January 2006 and exported products to overseas markets, including the Middle East and Africa, Asia, Australia and New Zealand.
According to Nokia India Employees Union, there are about 900 employees still working at the factory. Following the Nokia-Microsoft deal, the voluntary retirement scheme was offered for employees and 5,700 of them opted for it, from the total of 6,600.
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