After a long battle with Indian government over tax disputes, Nokia finds it better to just quit and walk away. The company has announced today that it is shutting down its Chennai-based factory on November 1st, 2014. The factory shutdown will leave thousands of workers unemployed.
Nokia has faced several tax disputes over the plant from the Indian Government. Last year, the Delhi High Court imposed a whopping sum of Rs. 2,100 crore fine on Nokia — against which the phone manufacturer pleaded to the Supreme Court of India, only to lose the appeal. In addition, the Tamil Nadu government fined Nokia 24 billion rupees when it found the company was illegally selling the factory’s handsets to Indian consumers.
Earlier this morning, Nokia India said that it will be suspending the all the production at the Chennai plant. “In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from 1st November,” it said in a statement.
Because of the tax disputes, the factory didn’t become part of Microsoft’s $7.2 billion deal which closed in April. Though, Nokia did resume the operations at the factory on a contractual basis for Microsoft.
Last year, when the income tax department froze the factory, the company slowly started to look at its other Asian-located factories for the production, and move its equipment there. The entire fiasco also resulted in thousands of people losing jobs and being forced to leave the factory. However, Nokia did provide these employees with reasonable compensation under VRS scheme. The factory employees untill the very end opposed the layoffs and pleaded to Nokia, Microsoft, and Indian government to resolve the issue.
Nokia says that it is still trying to minimize the impact on its existing employees. “As a responsible employer, Nokia is currently evaluating options to minimize the impact on existing employees at the manufacturing facility. It will share further information once details have been finalized,” the company added.