Nokia won't hand India smartphone factory over to Microsoft

The plan was among assets frozen by Indian authorities over a tax dispute

Nokia's ongoing tax dispute with Indian authorities has put an end to its plans to transfer a local smartphone factory over to Microsoft, as the software maker finalizes its takeover of the Finnish company's devices and services business..

Microsoft's roughly US$7 billion acquisition of Nokia's phone business is set to close on Friday.

The factory in Chennai in south India was among Nokia assets frozen by Indian federal authorities in a dispute over taxes for mobile phone software licenses. Production at the factory was allowed to continue.

A Nokia spokeswoman said Thursday that it was decided that the factory will not be part of the deal for now and the company will instead enter into a services contract with Microsoft.

The plan is an interim measure until the tax matter is resolved, she said. She declined to comment on recent reports that Nokia was planning to sell the factory, dismissing them as speculation.

Microsoft said Monday that its agreement with Nokia had been modified to exclude a factory in South Korea which will continue with Nokia. Twenty-one Nokia employees in China will now join Microsoft to work on mobile phones.

Nokia had offered to deposit into an escrow account an amount larger than the US$340 million tax claim, but the Delhi High Court asked it to hike that figure by another $570 million toward possible future tax liabilities, as a condition to release the factory. The court had earlier released the company's bank accounts in India.

The company also faces a sales tax claim from the state of Tamil Nadu where the factory is located. Nokia has contested the claim in the local High Court, stating that no sales tax can be levied on exported products. The state government claimed that devices made at the factory were not exported but were instead sold domestically.

Microsoft said it had no comment on the news about the Nokia plant in India.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

Join the newsletter!

Or
Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags MicrosoftsmartphonesMergers and acquisitionsNokiabusiness issuesconsumer electronicsrestructuring

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

John Ribeiro

IDG News Service
Show Comments

Essentials

James Cook University - Master of Data Science Online Course

Learn more >

Mobile

Exec

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?