As cries of a Digital India make the rounds, one giant is quietly bowing out of the playground that is India. Finnish mobile major, Nokia has announced that it will be suspending production in the country.
The announcement came concerning Nokia’s Sriperumbudur factory, close to Chennai which made around 50 per cent of all Nokia handsets. The factory employed around 8,000 people -nearly half of whom were women- in its heyday.
The factory had been shut by the Income Tax department for a backlog of past taxes to the tune of Rs.21,000 crore under allegations that Nokia sold handsets marked for exports in the domestic market without payment of the requisite value added taxes.
Microsoft, while taking over the Devices and Services business from Nokia has not taken control of the Sriperumbudur factory owing to an agreement by Nokia to address its interim production needs.
In a statement, Nokia said that Microsoft has informed it that it will be suspending handset production at the facility from November 1. 2014 owing to a lack of need for the facility and activity at the factory shall stand suspended until further notice from Microsoft.
It added that owing to the present asset freeze by the tax department Nokia is unable to explore opportunities to put the established facilities into a alternative uses.
The company will be dealing with shareholder and employee concerns in the wake of this announcement.
Worker unions on the other hand are alleging that the move is illegal since the company is using the word suspension to evade seeking the government’s approval over the decision which would have been needed had they made clear that the factory was closing.