Nokia Corporation has urged the Narendra Modi Government to quickly resolve the pending tax issue so that it can sell the mobile manufacturing unit in Chennai.
Nokia’s President and Chief Executive Officer Rajeev Suri said that the company did not need the factory as it was no longer in the mobile phone business post the deal with Microsoft.
“We would like to sell it so India has an opportunity to have a strong mobile manufacturing ecosystem in place.
“Currently, however, we can’t do so as the factory has become entangled in a tax dispute — despite the fact that we have offered to put all the proceeds of a sale into an escrow account until the tax issue is resolved,” Suri said in an e-mail interview to BusinessLine. Nokia could not include the Chennai factory in the sale deal with Microsoft after the tax authorities slapped a notice for alleged violation of withholding tax norms since 2006.
The Finnish company had said that it would continue to run the factory as a contract manufacturing unit.
But since then production has been partially shifted to other countries such as Vietnam, raising doubts over the fate of the 30,000 workers at the Chennai plant. Suri, who was appointed chief of Nokia Corporation in May, said that though the new Government did not create this situation, it is in its power to resolve the issue.
“A tax policy that does not include retroactive changes and that treats software sales in a way consistent with international norms would also be a very positive step,” Suri added.