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Nokia had threatened government to exit manufacturing in India but "talks have been productive"

Nokia had indeed written to India's finance ministry sharing its concerns of how India was becoming the "least favorable market" for the company. However, unlike an earlier report that claimed Nokia w

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Nokia had indeed written to India’s finance ministry sharing its concerns of how India was becoming the “least favorable market” for the company. However, unlike an earlier report that claimed Nokia would halve its manufacturing this year and reduce it next year, eventually shutting it down entirely, the letter was an ‘non-paper’ that was received by the ministry on June 19, which means it was an unofficial document, according to the Indian Express.

In the letter Nokia had raised points on the non-refunding of the 4 percent VAT by the Tamil Nadu government in accordance with the MoU signed between the government and Nokia for setting up a manufacturing plant in the state. “The state has not issued a government order in accordance with the MoU,” Nokia wrote in the non-paper. The company allegedly wrote that under the current situation it made it “more cost efficient for Nokia to have transferred the manufacture of mobile phones to China and to import them to Indian market rather than manufacture them in Chennai.”

The letter also highlighted the tax disputes between Nokia and Indian income tax officials and claimed that the government cannot violate bilateral tax treaties between two countries. “Nokia does not think India can override its international obligations and the mutual tax treaty, by introducing retroactive domestic laws without greatly disturbing the trust international business in India.”

Nokia India confirms having discussions with both the central and state governments but mentions that the talks have been productive so far.

“Nokia can confirm that it has been in discussions with the Central Government and State Government over ways to bring greater clarity to the business environment in India. These discussions have been both constructive and productive, and both sides have worked in a true spirit of cooperation. Evidence of this is the Tamil Nadu government’s recent issuing of a Government Order to us,” Nokia India said in a statement.

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  • Published Date: August 23, 2013 3:01 PM IST
  • Updated Date: August 23, 2013 3:32 PM IST