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Nokia set to shut down Chennai factory

Nokia started manufacturing at this plant in January 2006.

More than 1,000 employees of a Nokia factory in Chennai face losing their jobs as the Finnish telecom firm on Tuesday said it has decided to suspend operations at the mobile handset plant from November 1.

A statement issued by Nokia said Microsoft has informed them that it is terminating a contract to buy mobile phones made at the unit. “In the absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from  November 1,” the statement said.

The Helsinki-based 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.

“The Chennai facility could not be transferred to Microsoft because of legal issues related to tax demand by Indian government. An income tax dispute worth Rs 21,000 crore, which resulted in freezing of its assets, and a Rs 2,400 crore sales tax claim slapped by the state government are among the reasons that forced Microsoft to stop production here,” a senior Nokia official said.

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A Soundarajan, state president of CITU, the only trade union representing Nokia employees here, said the decision to stop production is illegal. “According to Industrial Disputes Act, the company needs permission from the state government before the closure. We want the state government to step in immediately to protect the rights of employees,” he said.

About 800 employees at the plant will be filing a case before the labour commissioner on Thursday.

Nokia started manufacturing at this plant in January 2006.

First published on: 07-10-2014 at 10:15:05 pm
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