Nokia chief meets Sharma over tax, investment issues

On September 4, US software giant Microsoft bought Nokia's handset unit for $7.2 billion

Amid reports that Nokia is mulling a pull out of India, the Finnish mobile phone-maker on Tuesday raised the issue of the Rs 2,080-crore tax row with the commerce & industry ministry.

Stephen Elop, executive vice-president (devices & services), Nokia, raised the tax issue with Commerce and Industry Minister Anand Sharma and assured him of commitment to the Indian market. Sharma asked Elop to approach the finance ministry to resolve the tax dispute.

Elop refused to say if he raised the tax demand with Sharma. But officials said the issue figured during the talks.

Nokia India has been slapped with a tax demand notice of Rs 2,080 crore over tax treatment of payments made for software supplied by parent Nokia Oyj for devices made in India. Indian tax authorities consider the payments as royalties that are subject to 10 per cent tax deducted at source. Nokia had written to the commerce ministry in June, threatening to leave India following the non-refund of value added tax by the Tamil Nadu government and the Rs 2,080-crore tax dispute.

After the meeting, Elop said, “The principal reason for my visit is to reassure and provide complete support for trade efforts here in India. There are changes underway at Nokia that we are very excited about. What we were talking here today is our continued commitment to all the works that we are doing here.”

Microsoft Corp had on September 4 bought the Finnish telecom giant handset business.

Earlier in the day, Elop visited Nokia’s Chennai factory. A Nokia spokesperson said the visit was part of the company's global strategy to visit offices across the world to meet employees and partners.

The company has manufacturing facilities at Sriperumbudur and Kolkata, and a research and development centre in Bangalore.

A company spokesperson at the Sriperumbudur unit, near Chennai, said Elop met employees and “reassured” them.

The company had kept the trip secret and declined to comment further.

M Shanmugam, general secretary of one of the staff unions there, said Elop arrived at the factory at 9 am and spent about three hours there.

Hours after the deal was announced last week, Microsoft chief Steve Ballmer wrote a general letter to the employees, saying “there are no significant plans to shift wherever work is done in the world as we integrate, so we expect the Nokia teams to stay largely in place, geographically”. This brought some relief to the 15,000 people whose livelihood depends on Nokia's Special Economic Zone at Sriperembudur.