Wednesday, 8 October 2014

Government to ensure no future Nokia-type plant suspension

A day after Finnish handset manufacturer Nokia announced it would suspend operations at its Chennai plant from November, the government Wednesday said it will look into the issue and try to ensure that such incidents do not recur.
“We will certainly see how best matters don’t occur again and we will encourage the ‘Make In India’ campaign,” Commerce and Industry Minister Nirmala Sitharaman told mediapersons here in response to a query on the issue.
“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 added.
Prime Minister Narendra Modi had in his Independence Day speech announced the “Make in India” campaign inviting companies across the world to make their products in India and create jobs in the labour-intensive manufacturing sectors.
Nokia on Tuesday announced suspension of operations at its Chennai mobile handset plant from November 1 after Microsoft terminated an agreement to buy handsets from the unit.
Microsoft has informed Nokia that it will be terminating the manufacturing services defined in the agreement with effect from November 1,” a statement said.
“In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from November 1. Unfortunately, the continuing 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,” Nokia added.
Tax authorities allege that Nokia avoided paying taxes by wrongfully claiming an exemption on software exports. The charge has been challenged by the company in court.
As per the Nokia India employees union, there are nearly 1,000 employees still working at the factory.