Finnish telecom company Nokia has requested the government to lift the asset freeze imposed by tax authorities on its manufacturing unit in Sriperumbudur near Chennai, so that it can explore potential opportunities for a sale.
Operations at Nokia’s Chennai unit were suspended following a sale of its handset division to Microsoft early this year. However, the Nokia plant was left out of the deal, since there were a few tax-related issues and an asset freeze imposed by taxmen.
Official sources have attributed the production slump in Nokia’s Chennai factory to the sharp slide in India’s factory output in October. Index for industrial production fell 4.2%, while the manufacturing sector, which accounts for 75% of total factory output, fell 7.6% during the month.
Output of telephone instruments including cellphones and accessories fell 78.3% during the month, mirroring faltering operations at the Nokia plant.
The company has told the government that sale of this asset will help generate employment and also support the government’s ‘Make in India’ campaign. It has argued that this is an urgent prerogative not only for Nokia, which is no longer in the business of making mobile phones, but also for the country to move towards its goal of supporting local manufacturing and reducing electronic imports.
“We believe that an eventual sale would offer a far brighter option for employment in the region and support the governments ‘Make in India’ initiative,” a Nokia spokesperson said in an emailed response.
In an email to HT, Nokia also acknowledged that it is scouting for a suitable buyer for its Chennai unit. “Nokia can confirm that it has been approached by parties interested in buying the Chennai facility, but due to confidentiality reasons we will not comment further,” the company spokesperson said.
Nokia had even entered into a transitional services agreement with Microsoft to address their immediate production needs and keep the factory operational. Microsoft terminated the agreement in October, and Nokia suspended production at the plant as of November 1 as it had no further orders.
“The Centre is sympathetic about the Nokia plant, but cannot help, since, it will set a bad precedent, which we cannot allow... the law of the land will have to be followed,” a top communications ministry official said.