Govt to look into shut down of Nokia's Chennai plant

With Nokia, the Finnish telecom gear maker, announcing suspension of operations in its Chennai mobile manufacturing plant, the government on Wednesday said it will look into the issue and make efforts to ensure that such incidents do not occur again.

"We will certainly see how best (such) matter don't occur again and we will encourage 'Make In India' campaign," Commerce and Industry Minister Nirmala Sitharaman said in the national capital.

Sitharaman, who is also Minister of State for Finance and Corporate Affairs, was responding to queries on Nokia announcing suspension of its plant and whether it would affect the government's recently launched 'Make In India' campaign.

"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 said.

On Tuesday, Nokia announced suspension of operations at its Chennai plant from November 1 after Microsoft terminated an agreement to buy mobiles from the unit.

The global telecom giant had said that the 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.

The company was forced to keep the factory out of a US $7.5 billion deal for sale of its handset business to Microsoft, due to tax dispute with Indian authorities.

Tax authorities allege that Nokia avoided paying taxes by wrongfully claiming an exemption on software exports. Nokia has challenged the claims of tax department in courts.

Nokia started manufacturing at Chennai plant in January 2006 and exported products to overseas markets, including the Middle East and Africa, Asia, Australia and New Zealand.

According to Nokia India Employees Union, there are about 900 employees still working at the factory. Following the Nokia-Microsoft deal, the voluntary retirement scheme was offered for employees and 5,700 of them opted for it, from the total of 6,600.