Foxconn Technology is in an advanced stage of talks with the Tamil Nadu government to resolve a Rs 21,000-crore tax dispute, which could help revive the Nokia mobile manufacturing plant in the state and provide employment to thousands.
The Taiwanese company has taken a significant step already in this direction, buying some machines from the plant earlier this year. A senior state official said Foxconn was keen to revive the plant, which is lying defunct for more than three years now. The state government held several rounds of discussions with the company, which now needs to bring in a formal proposal, the official added.
Once the company makes an application, the state would approach the Centre to lift an asset freeze on the plant and facilitate the revival of the factory which at its peak employed some 12,000 people and produced more than 100 million handsets a year. At the time, it was the world’s largest facility for the then mobile handset market leader Nokia, and was a showcase for India’s manufacturing capabilities.
“Foxconn’s India arm is talking to their headquarters to get internal clearances, and once they give a formal proposal, we may move the department of revenue, Government of India, to at least release the plant for their operations,” the official said. “They are keen, because they’re a neighbour and they know the local ecosystem, workers, etc., and our only agenda right now is to make sure that the machinery and building that is lying vacant, gets utilised again,” he said.
Foxconn has a phone manufacturing facility at Sri City, Andhra Pradesh, located on the border of Tamil Nadu’s capital, Chennai. It employs around 6,000 people there and produces handsets for the likes of Xiaomi, Nokia and Gionee.
The world’s largest contract manufacturer, which is also the biggest contract manufacturer for phones in India, did not respond to ET’s request for comment. But a person familiar with the discussions at the company said “the plan is to go further in this direction”.
Another person said Rising Star Mobile India, through which Foxconn runs its India manufacturing operations, bought machinery from the Nokia plant — shut in late 2014 — for an undisclosed amount after the Finnish company got permissions from the Central income tax authorities, as well as the Madras and Delhi high courts to sell those. It required the permission as there is a freeze on the assets due to the unresolved tax case.
“Earlier this year, Nokia engaged with a buyer interested in purchasing production machinery,” a Nokia spokesperson said. “Subsequently, we worked with the respective authorities and secured the necessary permissions for executing the sale of those specific production machinery.”
Nokia has been trying to revive the plant for years and had even closed in on the Essar Group as a potential buyer two years ago. But the ongoing tax case thwarted the sale. The factory was then valued at Rs 360-415 crore. In fact, the tax dispute had kept the facility out of Nokia’s global deal four years ago to sell its handsets business to Microsoft.
