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Nokia’s Chennai factory ceases operations

Nokia is shutting down its mobile phone plant in Chennai, India.

Although the Finnish firm sold its entire Devices & Services unit to Microsoft in April this year, a tax dispute from the Indian government meant that Nokia was obliged to retain the Indian factory, which has been in operation since 2006.

The firm no longer has any need for the facility after Microsoft ended a purchase agreement, so the plant will be closed on November 1st. The devices manufactured there were exported to the Middle East, Africa, Asia, Australia and New Zealand.

The local government claims that Nokia had not paid a tax bill of INR24 billion ($391 million) that the vendor incurred by selling products manufactured at the plant domestically instead of exporting them. Nokia was also ordered by the Indian Supreme Court to provide a guarantee of INR35 billion before it handed the factory over to Microsoft.

These issues resulted in Nokia and Microsoft signing a ‘transitional services agreement’ that allowed the factory to continue operations while the tax dispute was ongoing. Now that this agreement is seemingly over, Nokia has stated that it cannot transfer the factory to a new party due to the tax department freezing its assets.

The vendor will alert its shareholders that manufacturing has ceased, and while the final total of affected workers has not been disclosed, it is known that 5000 of the plant’s 6000 permanent staff members chose voluntary retirement when the sale was announced.

 

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