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Nokia to Wind Down Production at Handset Factory in India

by Killian Bell | October 8, 2014October 8, 2014 5:00 am PDT

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Nokia is set to wind down production at a handset manufacturing facility in India after selling its devices business to Microsoft back in April. The news comes amid ongoing tax disputes in India which prevented the factory from being included in the sale.

Nokia has kept its Chennai plant running under a transitional services agreement with Microsoft to manufacture devices as the software giant needed them. But with orders from Microsoft no longer coming in, the plant is set to be closed.

“Microsoft has informed Nokia that it will be terminating the manufacturing services defined in the agreement with effect from Nov. 1,” the Finnish firm announced in a statement today. “In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility.”

“Unfortunately, the continuing asset freeze imposed by the tax department prevents Nokia from exploring potential opportunities for the transfer of the factory to a successor to support the long term viability of the established, fully functional electronics manufacturing ecosystem,” it added.

In its heyday, Nokia’s Indian plant was one of the largest manufacturing facilities in the world, but it was presented with two separate tax claims — both of which were refuted by Nokia — prior to Microsoft’s €5.4 billion takeover. As a result, the plant could not be included in the deal.

Nokia has offered almost 7,000 workers voluntary redundancy packages since April, but only 5,700 accepted the offer, according to a report from Economic TimesThe employees who are left are said to be considering legal action in an effort to secure compensation.

Microsoft has also been making significant cuts since it took over Nokia’s devices business. Back in July, the company announced plans to cut 18,000 people from its workforce, 12,500 of which were Nokia employees who were transferred as part of the sale.

ZDNet

Killian Bell

Killian Bell is a 20-something technology journalist based in a tiny town in England. He has an obsession with that little company in Cupertino...

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