Nokia to suspend manufacturing operations in India from November 1

Company's facility was caught in the Rs 21,000 crore tax dispute

Mobile telecom handset maker Nokia announced it was suspending manufacturing operations in the country within weeks of the Narendra Modi government unveiling a Make-in-India campaign.

The company will suspend operations at its Sriperumbudur plant near here which once employed 8,000 people and still has 1,200-1,500 on its rolls.

The plant was excluded from Nokia’s deal in April with Microsoft to sell its devices and services business because of a Rs 21,000 crore tax claim. The income tax department refused to allow the plant to be transferred till its dues were paid.

Nokia had a transitional services agreement with Microsoft to keep the factory working. Microsoft has now informed Nokia it will terminate the agreement from November 1. Without orders from Microsoft, Nokia will suspend production.

The tax department’s asset freeze prevents Nokia from “exploring 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 company stated.

Nokia would be informing the labour commissioner about the suspension, the statement added. The company said it was trying to minimise the impact on employees.

“The company’s decision is illegal. They have cleverly used the world suspension, which does not require government approval,” said A Soundararajan, general secretary of the Centre of Indian Trade Unions and member of the state legislative.

SWITCHING OFF

• 1995: Sriperumbudur factory gets incorporated
• Investment: Nokia Finland made an initial investment of Rs 35.6 crore in Nokia India, starting in 1996, and later increased it to Rs 1,858.95 crore
• Number of employees: Till 2014, the Chennai factory employed around 8,000 (50% of those women) directly & another 25,000 indirectly
• The tax notice: The facility was excluded from the deal between Nokia and Microsoft for the former’s devices and services business, as the Income Tax Department at the Centre had frozen the facility.
  The I-T dept had slapped a Rs 21,000-crore tax notice on the company
• Turnover/sales: During the period 2005-06 to 2011-12, it had cumulative turnover/ sales of Rs 1,50,700.44 crore
• The produce: Till March 2014, around 800 million units of mobile phones had been produced
• Plant’s significance: About 50% of Nokia handsets were manufactured in India and 40-50% of the production was exported

CITU is one of the unions that represents workers in the factory.

Soundararajan said CITU would approach the state government. “The state government has to act now. We will be meeting ministers. We will also file a dispute plea with the labour department in the next two days,” he added.