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Nokia shuts down its India plant in Chennai, over 8000 workers lose job

Nokia shuts down its India plant in Chennai, over 8000 workers lose job

The government put a freeze on Nokia's assets due to a tax dispute over an estimated Rs 23,000 crore.

Chennai: Nokia, once an iconic mobile handset maker, is shutting down its India plant on Saturday at Sriperumbudur near Chennai, a company spokesperson said on Friday.

"As announced earlier (October 7), we are stopping handset production at our Chennai plant from tomorrow (November 1) in the absence of orders from our new parent firm (Microsoft), which terminated the mobile purchase agreement," a Nokia India official told IANS.

The plant's shutdown has rendered over 8,000 workers jobless.

24-year-old Priya has gone from assembling mobile phones to stringing together flowers. A widow, Priya was taking care of her five-year-old son and her ageing parents on her monthly salary of nearly Rs 6000. But after working for nearly three years as a trainee operator at Nokia's mobile phone plant near Chennai, Priya was laid off in April earlier this year. "With my Nokia salary, I fed my family and sent my child to school. I would have been confirmed in three months and my salary would have increased to Rs 10,800. But that job never became permanent," Priya said.

Similarly, 21-year-old Uma Maheshwari who was once a contract worker at the Nokia factory was fired in January after nearly two years into the job. Though she works part-time as an insurance agent, a steady job - favourable for women - has been hard to come by. "With Nokia, there was always security. Even if you couldn't make it to the bus stand, they will come to your doorstep and pick you up. No other employee can give such security like Nokia," she said.

The major step was taken after global software major Microsoft, which acquired the Finland-based Nokia's global devices and services business, including assets in India for $7.2 billion April 25, decided to suspend manufacturing handsets from its Chennai plant though it could not take possession of it due to legal battles over a tax notice from the Tamil Nadu government and the Supreme Court in March. The government put a freeze on Nokia's assets due to a tax dispute over an estimated Rs 23,000 crore.

"We can confirm that constructive discussions with union representatives and the labour commissioner have resulted in an agreement on a financial package for Chennai factory personnel," the spokesperson said in a statement a day after a tripartite meeting here between company officials, union members and the top labour officer.

At the time of closing down the operations, about 1,100 employees were working in the plant, including 900 on the assembly lines.

Nokia made a cumulative investment of $300 million (Rs.1,800 crore) in the Chennai factory over the last eight years.

Touted as Nokia's largest production facility outside Europe, the Chennai plant started rollout out initially low-end mobile handsets from January 2006 after it was unveiled by then prime minister Manmohan Singh in the presence of his Finnish counterpart Matti Vanhanen.

"The asset freeze by the state tax department has prevented us from transferring the factory to any other mobile handset maker despite having a fully functional electronics manufacturing system," the official said.

The state government slapped a Rs.2,400 crore notice to Nokia's India subsidiary in March, accusing it of selling the handsets from the Chennai plant in the domestic market than exporting them.

In another tax case, the apex court directed Nokia India in March to furnish a Rs.3,500-crore guarantee before transferring the plant to Microsoft.

According to the company's employees union, as Microsoft kept out the Chennai plant from its acquisition deal with Nokia, the facility turned into a contract manufacturing unit and production slumped to four million handsets per month in March from 13 million units at one time in the past when about 8,000 employees were working in three shifts.

Once a dominant player in the burgeoning mobile phones segment across India, with over 80 percent market share, Nokia lost out to rivals like Samsung, Apple, Sony and Panasonic in the next-generation handsets, popularly known as smart-phones over the last couple of years.

(With inputs from IANS)

first published:November 01, 2014, 07:21 IST