Income tax issues and strategic blunders of the company resulted in Nokia India issue, says TN's industry secretary

Electronic hardware, other than Nokia, the State has been having a very good run, he added

The Tamil Nadu government today said the state government had no role in the Nokia plant shutdown in the state, and had blamed the I-T department and “strategic blunders of the company” for the failure.

Speaking at an Indo-French seminar on ‘Make in India’ organised by the Indo-French Chamber of Commerce and Industry (IFCCI) and the Madras Chamber of Commerce and Industry (IFCCI), CV Shankar, additional chief secretary, TN industries department, said “...it’s not because of any fault of the state government or any lack of efforts from the part of the state government. It was basically an issue with the income tax (I-T) department of the Government of India and the strategic blunders of the company itself.”

Shankar said the state was having a very good run in the area of electronics hardware manufacturing, with 23 electronic hardware technological parks already functional in major IT special economic zones, while two manufacturing clusters were coming up at Coimbatore and Hosur.

Earlier, a senior state government official said the Essar Group was among the three investors who had shown interest in reviving the Nokia unit near Chennai. The controversial Nokia plant was frozen by the I-T department in an alleged Rs 21,000 crore tax dispute.

The fate of the plant is lying with the I-T department, and the tax dispute is pending with the Delhi high court. The I-T department had stuck to its stand demanding bank guarantees to the tune of Rs 3,500 crore in the dispute.

However, Nokia has been working hard to get its assets unlocked through a court order so that it could sell its assets and make the part-payment towards the tax arrears, said Sankar.

It may be noted, apart from I-T department’s tax claim, the Tamil Nadu government had also slapped a notice asking Nokia to deposit Rs 912 crore and Rs 600 crore as penalty. Due to the ongoing disputes, Nokia had not been able to transfer the plant to Microsoft, which acquired Nokia’s devices business.

Left with no options, Nokia had suspended the plant’s operations last November, leaving around 30,000 jobless.

According to state government officials, if the I-T department agrees to Nokia’s submission and the court releases their assets, Nokia is ready to sell its plant and deposit the tax arrears in a separate account, and the total claim money can be adjusted once the tax matter is decided by the court.  

“Now, the Prime Minister has assured of reviving the plant. We are hopeful some solution would come out very soon,” said state government officials.

Set up in 2005 with a Rs 500 crore investment, at its peak operations, the Nokia plant had been producing 16 million handsets per month. The plant and machinery are in a good condition and the buyer could start manufacturing from the day one of its acquisition, the officials added.