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Chinese technology major Lenovo is planning to revive the phone assembling and packaging unit of Motorola at Sunguvarchatram near Chennai. The facility, located a few kilometres from the Nokia facility, has been lying idle since 2013. Lenovo got possession of the plant after it acquired Motorola from Google in 2014.
Speaking to the Business Standard after inaugurating three new stores in Chennai, R K Amar Babu, managing director of Lenovo India, said: “We’re evaluating and studying it. We follow global supply chain model. Wherever it is most cost effective, we’ll manufacture locally.”
On whether Lenovo would revive the Motorola plant, he said: “Make in India and Digital India are great visions, led by a leadership with conviction. The key is how to translate this into execution. In smartphones and tablets, the government has made it. Hence we need to evaluate it (manufacturing in India).”
According to him, the Centre has taken big steps to make smartphones and tablets manufacturing in India attractive.
Lenovo currently manufactures around three million personal computers and laptops in the Union territory of Puducherry, about 150 km from Chennai. “We’re manufacturing here because it is cost competitive,” said Babu.
Restarting the Motorola plant will help the Centre and state Governments, which are trying to boost investors' confidence that took a hit after Nokia decided to suspend manufacturing at its Sriperumbudur facility near Chennai, resulting in 30,000 employees, 50 per cent of them women, to lose their jobs.
Nokia's facility could not be transferred to Microsoft, which acquired Nokia, since the Income Tax department froze the facility in an alleged Rs 21,000-crore tax dispute. The Tamil Nadu government had also slapped a tax notice of a little over Rs 900 crore along with penalty.
Recently, Prime Minister Narendra Modi had said the Nokia plant would be revived. The state government also requested the tax authorities to lift the freeze, so that a new owner could take over.
According to Babu, earlier smartphones attracted an excise duty of one per cent and one per cent under the national calamity contingent duty (NCCD) - taking the total to two per cent, compared with an import duty of 6.5 per cent. Now the import duty has risen to 12.5 per cent, while the excise duty and NCCD remains at two per cent.
“There is a case for local manufacturing. However, we need to look at input cost, component cost and others. Making in India is definitely cost effective,” he said.
