Nokia is reported to have cut manufacturing in its India factory near Chennai by half this year and will cut it down to a fourth from current levels, CNBC Awaaz reports. Nokia India has denied the report calling it baseless. “Our longstanding policy is not to comment on media speculation. We would like to underline the fact that Nokia is committed to India, and Chennai is an integral part of our global manufacturing strategy,” a Nokia India spokesperson said in a statement to BGR India. Also Read - Nokia withdraws plea to sell Chennai unit as buyer backs out
According to the report, Nokia had sent a letter to the Finance Minister, informing him of Nokia’s intentions of moving manufacturing from its Chennai facility to its newly opened facility in Vietnam. The report further claims that Nokia would halve its production in 2013-14 to about 80 million units from the current 150 million units and would further reduce it to about 40 million units in 2014-15. In the letter, Nokia allegedly cited that it wasn’t seeing tax benefits that was promised for 10 years for setting up the plant in the SEZ and saw more benefit in importing phones than manufacturing them within the country. Also Read - Delhi High Court agrees to urgent hearing of Nokia plea to sell Chennai unit
The report further alleges that the production cut could impact up to 2,000 jobs. Nokia manufactures feature phones and full-touch Asha phones in its Chennai factory. These phones not only satiate local demand but are also exported to other markets in Asia, Middle East and Africa. Nokia had set up the factory in 2006 and has since invested $330 million and employs nearly 9,000 people. Also Read - Nokia Chennai plant crosses 2 million units milestone in production of network components
Earlier this year Indian Income Tax authorities had raided the Chennai factory, claiming tax evasion by Nokia on payments made to the parent company, Nokia Oyj in Finland, for royalties on software transfer. The authorities had at that time asked Nokia to pay a penalty of Rs 13,000 crores. In response, Nokia had filed a letter of complaint against the Income Tax authorities.
In the meanwhile, here’s the original report that made the claims.