Nokia Hangs Up, Will Lose Its Sriperumbudur Address in November
When the first handset rolled out of Nokia’s Sriperumbudur facility in 2006, it was hailed as a beacon of hope for the region. In fact, disgraced and beleaguered former telecom minister Dayanidhi Maran went so far as to say that the factory would make Sriperumbudur an international hub for telecom manufacturing units. Come November 1 though, eight years after that first handset, Nokia will shut down production at the facility and the dreams of many will lie shattered.
The story of the Nokia plant is one of hype and initial success followed by reversal after reversal. For many years after the plant was established, it thrived. It even fulfilled the promise of being the largest in the world.
The plant was churning out more than 14 million handsets a year at its height, less than two years ago. A thriving ecology also grew up around the company to cater to its demands, with companies like Foxconn, life-on Mobiles and BYD Electronics, most of which have since met with drastic cut downs in production.When Income Tax officials raided the plant, the first signs of trouble began in early 2013. Soon after, an income tax bill eventually coming to around 3,500 crore was slapped on the company – one which the company refused to pay citing India’s double taxation avoidance agreement with Finland, which it said meant that income tax would be paid by it in Finland as well. As the dispute escalated, the company’s accounts were frozen by the Income Tax Department.
Nokia also fell afoul of the State Government which slapped a 2,400 crore sales tax bill. Beset by issues, Nokia dived headlong into its deal with Microsoft to transfer its global devices segment to the software gaint. Unfortunately for employees, the asset freeze meant that Nokia was unable to include the plant in the deal without resolving the tax disputes.