Nokia Oyj may be a step closer to selling
its shuttered factory in the southern Indian city of Chennai, after a
court in New Delhi agreed to bring forward a hearing in relation to
India’s tax claims against the Finnish company.
Nokia asked for a hearing soon, as it has found a buyer for
the plant, according to a Press Trust of India report that was carried
by local media company NDTV on its website.
Accepting Nokia’s request, a two-judge bench of the New Delhi High
Court agreed to hear the case on May 26 instead of Sep. 7, Press Trust
reported.
The factory was once Nokia’s showpiece manufacturing
facility, churning out handsets by the millions each month, which were
even exported, and
employing some 8,000 workers. All that changed when
Nokia sold its mobile phone business to Microsoft last year.
Indian tax officials took issue with transactions involving
software purchases by Nokia India from its parent in Finland, and froze
its assets in India -- including the factory -- against the tax claim
on those transactions.
Tied up in the dispute, Nokia had to leave the factory out
of the sale to Microsoft, and continued to supply handsets as a contract
manufacturer. In October, Microsoft terminated that contract and Nokia
said it was suspending operations. It had already all but wound up operations at the plant, with most employees taking it up on a voluntary retirement offer.
After Nokia’s closure of its plant in India, contract manufacturer Foxconn Technology Co. Ltd., a supplier to Nokia, decided to close
its own plant in Chennai as well. Nokia’s feature phones still command a
sizeable market share in India, although such phones are on their way
out as smartphones become cheaper.
Nokia’s Lumia series smartphones, however, which run on
Microsoft’s Windows operating system, are gaining traction in India,
albeit under Microsoft, which has introduced new cheaper models as well
as the so-called phablets with larger screens, such as the 640 XL.
India has between 150 and 160 million smartphone users,
while another 850 million or so mobile phone connections consist of
basic feature phones. If a sale results in the factory being refurbished
to make smartphones locally -- rather than in the plant being stripped
and sold for junk -- it will provide a boost to India’s growing
smartphone ecosystem.
Presently, even though companies such as market leader Samsung Electronics Co. Ltd. assemble phones locally
in India, the country is widely seen to be lacking a more mature
ecosystem of component suppliers, including major parts such as cell
phone cameras, displays and batteries.
This has made manufacturing in India a challenge for new entrants
such as Xiaomi Inc., whose phones have become very popular in India.
Xiaomi has said it is in talks with its suppliers, including Foxconn, on
the best way to manufacture its phones locally in India, where it is
fast gaining share with models such as Redmi 2 and Mi4i.
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