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This article has been modified. Please read the clarification at the end.
In a strongly worded letter to the Department of Industrial Policy and Promotion (DIPP) and the Department of Electronics and Information Technology (DeitY), the Prime Minister's Office (PMO) is learnt to have "rebuked" the two for not expediting the revival of the stalled Nokia plant in Sriperumbudur, Chennai. The stalled plant has emerged as a blot on Prime Minister Narendra Modi's pet project, 'Make in India'.
Though the government has been contemplating reviving the plant, which was shut on November 1 last year due to a tax dispute, DIPP and DeitY have been involved in a war of sorts regarding which will take credit for the proposed revival. While DIPP wants to embrace the project under the 'Make in India' programme, DeitY wants to bring it into the ambit of the 'Digital India' campaign. As a result, a resolution on the issue has been delayed, despite the government proposing various solutions to end the deadlock.
In its letter, the PMO said the shutdown of the plant had adversely impacted investor confidence.
It also added that the government's plan to transform India into a manufacturing hub might also be hit, officials told Business Standard. It stipulated the matter be resolved by the next financial year, sources said.
"This is a project that aptly fits into the Make in India vision that the government has envisaged. We are going to bring it to steam soon…The government has not ruled out an out-of-court settlement," said a senior DIPP official.
DIPP and DeitY have proposed to the revenue department that the plant be sold and the proceeds be put into an escrow account. Therefore, once a court case in the matter is over, whoever wins will get to keep the proceeds.
"We have been trying to convey to the revenue department that the facility is currently under it, but if it continues to be in this status, it will not be useful a few years later. We are working towards it; I think we have more or less succeeded," said an official of the Ministry of Communications and Information Technology.
The official added the ministry had been trying hard to convince the revenue department about the ill effects of holding on to the matter. "Sone ko jyada der tak band kar ke rakhenge toh mitti ho jayega…In the case of impounded cars, woh police offices mein padhe padhe kharab ho jaati hai. We don't want that to happen with Nokia (if we keep gold locked for long, it will lose its value…We do not want Nokia to suffer the same fate as that of cars impounded and kept in police stations)."
In an interview to Business Standard, communications and information technology minister Ravi Shankar Prasad had said Nokia's Chennai plant had became "an orphan after Nokia sought to sell its assets to a buyer". The electronics department has suggested measures to revive the plant to Finance Minister Arun Jaitley and it is likely an announcement in this regard will be made in the Budget, scheduled for Saturday.
In March 2013, Nokia was issued a notice by the Income Tax Department, demanding payment of taxes for six years starting 2006-07.
The department had asked Nokia India to pay about Rs 2,000 crore for not paying tax on the royalties it had made to its Finland-based parent, Nokia Oyj, for downloading software on the mobile devices manufactured at the Sriperumbudur facility since 2006.
The company was also involved in another legal dispute, in which the Supreme Court asked it to produce a Rs 3,500-crore guarantee before it could sell the Sriperumbudur plant to Microsoft, which bought Nokia's handset business in April 2014.
The plant, which was Nokia's biggest mobile handset manufacturing unit globally, was shut as Microsoft terminated its mobile purchase agreement with it, leaving it high and dry.
| Correction |
| The Ministry of Commerce and Industry has clarified that it received no directive from the Prime Minister's Office on the question of reviving the stalled Nokia plant in Chennai. It has also clarified that there is no inter-departmental rivalry between the department of industrial policy and promotion and the department of electronics and information technology in implementing the Make In India and Digital India programmes. The errors are regretted. |
