Nokia to shut down factory in India on November 1 after Microsoft cancels purchasing deal

Nokia will shut down operations at its Sriperumbudur plant near Chennai from November 1 after Microsoft terminated its purchase agreement with the facility. In a statement, Nokia had this to say:

Microsoft has informed Nokia that it will be terminating the manufacturing services defined in the agreement with effect from 1 November 2014. In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from 1st November.

The facility was not included in the sale of Nokia's handset unit to Microsoft due to tax litigation from the Indian government. The Tamil Nadu government initially levied a Rs. 2,400 crore fine on Nokia for selling products destined for international markets in India, and then the Supreme Court decreed that Nokia could continue operations if it deposited Rs 3,500 ($571 million) crores in escrow before the transfer to Microsoft. As a consequence, Nokia entered into a transitional services agreement with Microsoft to address immediate production needs.

The factory was one of the largest facilities for Nokia, and accounted for the production of over 800 million handsets and employed a staff of 8,000 full-time workers and 25,000 ancillary workers.

Source: Times of India

Harish Jonnalagadda
Senior Editor - Asia

Harish Jonnalagadda is a Senior Editor overseeing Asia for Android Central, Windows Central's sister site. When not reviewing phones, he's testing PC hardware, including video cards, motherboards, gaming accessories, and keyboards.

  • Way to go Indian government!! And you cry for foreign investments!
  • Native American
  • Haha
  • Does everyone who manufacturers handsets in India have to pay this tax?
  • It's more of a fine than a tax
  • Yes, it is probably excise duty that has to be paid if goods are sold in India, that
    is like 12.36%+14.5% on every product manufactured. If the goods manufactured are exported then no such duty shall have to be paid.
  • Anybody who manufactures anything in any country have to pay TAXES.
  • Not true
  • Pls elaborate!!!
  • Actually, it's the other way round. The government was always against it but till 2013 and the investors were pretty much happy to see it come as they got another country to trap under their own products rather than local. :)
  • I thought MS gave those employees Lumia 6XX (635?) because they were protesting and finally solved the issue with Indian government:)
  • hey that was in China facility.
  • Really? I remember they had problem with China as well, but thought China finally let it go :)
  • It was in China, LOL
  • So sad.
  • Yeah, that India's government is so greedy. They should have been greatful that Nokia brought revenue and jobs into their economy, but they got greedy and wanted more money resorting to basicall extortion with not only Nokia but many other companies are in litigation with india's government right now.
  • Nokia did not come to India to do charity or to build India's economy.  They came looking for cheap labour and to maximize their profits.  They thought they can maximize it further by not paying taxes and they got the treatment they deserved.
  • Did the 33,000 employees get what they deserved?
  • That is Nokia's responsibility.  The govt. was not involved in the recruitment process.
  • And they came armed with a tax treaty signed by the Indian Government that India refuses to honor.
    Such a bad call. There are other places European companies can go to manufacture their goods. Who will lend them money to build a factory in India now?
  • God speed to those now unemployed.
  • This. It's a tragedy for the little people and their families. A big win for the Government.
  • They are ruining themselves -_-
  • Daymn!
  • God speed to a facility to manufacture more Nokia like Windows phones, we don't want blu, etc
  • Speak for yourself and I own 4 nokias
  • Retard. I'm saying I hope there are more facilities that have the tool and die sets for manufacturing phones that are like Nokia phones.
    I like Nokia build. However, if the factory and equipment go bye bye, MS may come up with a different design.
    Yes, MS has other locations via Nokia, but this was the largest facility.
  • Calm your tits bruh.
    How does losing a factory have any influence in the design of future devices?
  • It means that there is no economic incentives to choose designs that are limited by the previous facilities machines and facility limitations. Easier to make big changes. I love my Nokia build quality (made in China as it turns out) but wood love to see a metal "Surface" phone from a new factory.
  • Way to go India government, now you have to deal with people that just lost their job
  • Exactly. That's a good way to put people on the street.
  • Indian government know very well to deal with the local people.  It also know how to deal with these foreign extortionists, who hold the local people at ransom and try to wrangle with the govt. to avoid paying taxes.
  • Fuck u ms !
  • why ? because they didn't want to pay extortion money to the Indian goverment ?
  • MS? What about Indian Government?
  • I do not understand your logic...
  • Definitely not MS fault, stupid greedy tax  department attempting to extort money out of foreign investors, I had hoped the new government would have sorted this out, but i suppose the damage was already done. Who in their right mind would invest in india. The poor employees are those that suffer, as does the govenment and economy as a whole. Such a shame and loss of skill, talent and excellence
  • Excuse me? Nokia had not paid taxes for a long time. They had to pay that and the fine. Not our govs fault. Posted via Windows Phone Central App
  • you sound like you are working for that government. I always though the amount in dispute was way too much for a tax on ringtones and little symbian apps.  Corruption, if you ask me. Now, that lousy government has to deal with 8,000 unemployed. 
  • Nope I don't work for the government. How can there bee corruption in this? This was imposed by the supreme court of india which is completely free of gov control. Posted via Windows Phone Central App
  • I honestly doubt you will convince anyone that the tax claimed is a fair amount, supreme court or otherwise, Just look at the Vodafone arrangement where the tax authorities were trying to claim tax on the sale of foreign assets to which india has no claim. It is truly shocking how anti business the authorites appear to be. As a foreign investor, would you risk investing in the market 
  • I am in complete agreement with you. We do have some retro taxation laws that are the root cause of such problems. Many are going to be removed in the upcoming winter session of the parliament Posted via Windows Phone Central App
  • Precisely. And Nokia was covered by a tax treaty that India is not honoring.
  • I refuse to believe that. Nokia, being such a big company, would have a hard time evading income tax altogether and they've paid their dues properly in other operations all around India, so why skip this factory in particular? Tamil Nadu just decided that it was owed this much and lodged a complaint regarding that to which the supreme court demanded a minimum "security deposit" to continue the case. No negotiations, no explanations. Serves them right. Now think about the 25,000 jobs and millions in revenue they've lost because they wanted to siphon off a couple of million from the company. So much for a "corporate-friendly" India. At this rate, they'll do the opposite of what Mr. Modi intends and drive out foreign investment.
  • You talk as though you are the keeper of Nokia's account books.  LOL.
  • Three only thing a "Security Deposit" will secure in India is the retirement funds of the Judges.
  • Fuck the income tax department. They themselves dont know how to calculate the tax. They are like vultures  
  • Do you know to calculate tax.  Then may be you need to teach them.
  • I'll take an Indian math over an American math any day.
  • +1 haha Posted via Windows Phone Central App
  • Now now .... I don't know who is at fault between Nokia and Indian Government. But Microsoft really have nothing to do with this. No one .... I repeat ... NO ONE crazy enough to buy something that contain problems. Not me ... Not Microsoft ... And I bet not even you. (-_-)a
  • That's what happens when government gets too greedy. To paraphrase Thomas Jefferson, governments that's govern least govern best
  • If he saw how the US government is today it would break his heart. They started something so great that has been steadily worsened over the decades.
  • Well, none of them could imagine the shit this or many other countries have to deal with. War, domestic shit, foreign affairs, health, jihad bastards, get the point. Jefferson might be more impressed that shit didn't collapse and grew into the most powerful country the world has ever seen., so far.
  • Because we all know how things were so much better during Jefferson's time (colonial wars, increasing domestic crime, mundane economy, deadly "incurable" diseases, outlaw gangs, slavery down south). The world has just moved onto new problems, that's more like it. I think he'd just turn in his grave a little when he learns about a government letting thousands of jobs leaving the country because of stubbornness.
  • And if Messers Jeffeson et al would be really so upset, they could always ask the british to take them back under their wing, that said its not all rose in the "dis United" Kingdom. Who can live happily with Europe, or even themselves.
  • Well said @Spicymikey
  • Your comparing apples and oranges. Less people less to govern in a day and age where there were also less countries to deal with internationally. A government the size that it was back then would never last in this day and age.
  • That factory is important. We can't fully rely on china and they can come up with other stupid reasons of banning things or antitrust cars cases.
  • They only manufactured feature phones here. No wps. Qnyways ms was going to stop feature phones... Posted via Windows Phone Central App
  • Ok, no loss at all. The employees can become telemarketers and bother people at all hours of the day.....just kidding
  • Didn't mean to say that. I am very sad that so many of my fellow countrymen will lose jobs and increase oir imports :( Posted via Windows Phone Central App
  • Go Argo... ;) yourself!
  • did this movie just screen the other days in india or why is everyone using this phrase
  • +928
  • I live just 2km away from this plant.
    Work of closing is going on here.
  • Hey isn't Jayalalitha in jail? Hmm, it seems TN isn't in a nice position right now..
  • She got bailed I got a notification from msn news few hours back
  • Actually they rejected the bail notification from TOI :)
  • Yep, tn is becoming a very bad place for investment. Other states are way more attractive now Posted via Windows Phone Central App
  • Wtf is TN please?
  • Tamil Nadu, its a state in india. Capital is chennai where they had the plant Posted via Windows Phone Central App
  • Tamil Nadu (the province or state), where the Chenai city is located along with all those telemarketing outsourcing companies.  Regards, Somebody who lost his job in 2008 when the company's customer service was moved from Texas to Chenai. 
  • That's sad :( Posted via Windows Phone Central App
  • Sorry to hear about your job loss. You should read Tom Friedman's book 'The world is flat'. You can't blame a country or company for losing your ever replaceable job to a cheaper market. In the book, he talks about how you should think about adding more skills that is irreplaceble by a remote work force from a far away cheaper market.... and your skills should also be in high demand in your local market. Most people, including me, tend to blame the system for their own shortcomings.
  • The NOKIA name is as tough as its phones. U insult or love it. The fact abt its phones cannot be denied or cmpared. Accepted that it failed to adapt to the fast changing mobile environment
  • great... more devices made in EU! :) (hopefully!)
  • yes.. nokia just loves to do business with the germans (bochum:P)
  • Doubt it. Nokia had only one factory left in Europe, in Hungary. And Microsoft made sure that one was to close down too. It sucks for the workers but at the same time I have no pity. Their jobs were created at the cost of European jobs too. So now though luck.
  • No jayalalitha didn't got the bail... that was a fake news.. She is still in jail.
  • Hard to tell the true ups and downs in cases like this, but the fact remains that production has been terminated and 8000 Indians are without a job. In that light, one can argue that the Indian authorities involved made some bad decisions. And once again the Chinese will rejoice. Sigh... :-(
  • Not just 8,000 as if you take into account the ancillary employees the number is 34,000... Who will be out of work. Sad state of affairs...
  • Yeah and what about indirect jobs?
  • They can build teepees.......relax just kidding
  • And Microsoft doesn't fall for the extortion tactics of the Indian government, shame how corrupt India remains...
  • Yeah the indian government is very corrupt!
  • They are corrupted before birth :D
  • Really, and which country are you from???
  • Yeah, don't blame Microsoft, blame the Indian government thinking they had a cash cow.
  • Ms has nothing to do with it, I repeat NOTHING. Its the old nokia Posted via Windows Phone Central App
  • They already built Nokia factory in Vietnam to replace this a few year earlier.
  • nice one India. MS can make great phones in other markets who does not charge half a billion fine for a violation of a ridiculous law.
  • Ya...actually.
  • LOL wtf, if MS isn't keeping the name NOKIA, closing the Chinese and Indian manufacturing plants, and letting go of the majority of Nokia's highly talented R & D people what the heck did they spend all that money for???
    I mean can the patents really be worth that much?
  • They are keeping a majority... Not letting go of a majority.
  • Yes, they're closing down the feature phone manufacturing facilities and let go the feature phone / asha / android R&D facilities.  Did you think they were going to hang on to those?
  • So perhaps Nokia did that on purpose.  Stop paying tax.  Govt. fines you.  Use that as an excuse to close down factory.  Blame the govt.  Very convinient.!!!
  • They are not letting go Nokia R&D
  • So, everything is moving to vietnam these days?
  • Taiwan is a good alternative too :) 
  • I thought they had a plant before in Thailand because some of the parts of Nseries and Eseries were manufactured there.
  • I guess all our fighting over there for capitalism and they succeeded manufacturing wise. Beautiful country though.
  • Napalm brother, napalm
  • Microsoft screwed Nokia employees. They will screw it's next with cheap handsets
  • Good decision from Microsoft, considering how bad the quality of those Indian made handsets are.
  • Curry in the keyboard
  • Quality is very high in india. We have quality but sadly not the quantity unlike china... Posted via Windows Phone Central App
  • I'm not gonna compare between the products from India and China. Consider a European phone, the other two seems like third grade.
  • A UK based phone???.....where can I get one.....LOL.
  • At your nearest quality Austin Healey Dealer!
  • Never heard of it!!!
  • GooD decision from MS. Indian briber's government should consider their people over money . It remind me of 90's coca cola incident in india .. they have that kind of germs in their blood :)
  • Congratulations, Indian gov't, for putting people out of work.
  • What you could actually be saying is "Congratulations Microsoft, for cleverly leaving out a manufacturing plant that has gotten into a tax dispute!"
  • What will then this employees do??
    8k full time workers..ohh man what the indian govt did??
  • What are you suggesting? Let the foreign company evade taxes because they think we are vulnerable because of the number of people employed? Oh I don't think so.
  • Dumb indian government
  • Out em on a reservation like the other Indians
  • The Indian government is crap. Can't stand it.
  • Came to Indonesia...
    We has friendly tax for foreign investor :D
  • Will this affect availability of phone in south India
  • From the workers' standpoint I agree that this sucks. From Microsoft's standpoint it is totally a rational move not to get involved with that factory.
    As for moving the production to Europe: As much as I would applaud it, it simply wouldn't be cost efficient for Microsoft to do so. Would love it if their phones were produced in Finland though, but that's just me being sentimental.
  • Wait what? Microsoft cancled the purchase of Nokia's devices and services division???
  • No.  Only this factory in this country because of the requirement of taxes being imposed on them by the Indian government.  The rest of the Nokia purchase is OK.
  • No but given that they've already fired half the employees they got and closed a bunch of's as if they canceled half the deal. 
  • Well done Indian government. They tried to use the factory as hostage and extort money from Nokia. Good job, now they have bunch of unemployed workers to deal with. And Im sure this is a warning to other companies thinking of investing to manufacturing in India.
  • Putting the cart before the...cow?
  • Wonderful words. Yes - a warning to other companies thinking of investing in India. Better abide our laws :)
  • On the contrary, Nokia used this "8000 local people as employees" fact as their leverage and tried to evade taxes.  Govt. showed Nokia the middle finger and asked them to pay up or get out.  
  • Lol dey should keep d company in my city so da mt by giving sum mny to politics so dey can manage easily nokia plzzz come to hyderabad ...... Yaar dnt close
  • I heard Microsoft has been busy putting orders for materials for warehouse type places in the USA.  Maybe increasing production on USA soil.
  • Orders for warehouse type places, if true, were probably for storage. Production in USA - I don't think so.
  • Then there will be no more low cost phones by Nokia....or Microsoft for that matter.
  • What did this factory produce? Feature phones? Asha? Nokia X? Lumia? If it's any of the first three, Microsoft is scaling them back anyway.
  • First 2 Posted via Windows Phone Central App
  • It was the right thing to do. Well done Microsoft.
  • Yeah, come to Taiwan. We make all the iPhones anyway. HTC, Asus, Acer are all here.
  • I live like 2 miles from the factory. I have seen their (workers') protests and posters. They are not disappointed with the government, at least not the majority. If you foreigners think that we would look the other way when you defy our laws, then I am sorry to tell you, you are dead wrong. I have studied in a college of a governtment company and I have seen them pay fines to the Municipal too. You should also know that the Hyundai plant is 5 miles away from the factory, which happens to be working fine. Then why not these guys? Please don't be prejudiced. These behemoth companies are not exactly honest. They try and evade taxes. I state it again. We are not calling out for investment from people who think we are vulnerable. We are calling out for investment from people who are straightforward lawful businessmen.
  • +1 Posted via Windows Phone Central App
  • Exactly, that is why I think that this was a ploy by Nokia to find an excuse to close down their factory. So perhaps Nokia did that on purpose.  Stop paying tax.  Govt. fines you.  Use that as an excuse to close down factory.  Blame the govt.  Very convinient.!!!
  • Now who has the factory? Nokia or Indian govt? If Indian govt then they can still come up with some other project over there and can employee many others not necessary the same employees from Nokia.
  • This is what happens when a government demands taxes from a company that is already providing good wages and health benefits to citizens of that country.  Demand too much and you get nothing!
  • Oh my god, you people make me sick! Read my comment - just above yours. Have a nice day!(Or night, whatever time it is in your country, lol)
  • People are in denial here my friend Posted via Windows Phone Central App
  • Actually, people are racist and prejudiced, my friend. Unfortunate, isn't it? :(
  • Served them right...India, famous for it's entrenched corruption is losing out to China...extortion doesn't pay...
  • Modi what r u doing... Disappointed
  • This shit started before Modi was elected... Didn't expect anything different from the Indian government..... Hope Modi can turn this around.. That was a big factory with lots of workers...
  • How do you know that the shit is with the govt. and not with Nokia.  I don't think that the govt. would do such a thing and jeopardize such a huge investment if it was not lawfull.  I think Nokia was using this fact to their advantage and taking the govt. for a ride.  
  • As much as we all love erstwhile Nokia D&S, people here should shun their fanboyism and respect the Court's decision. The Supreme Court in India is not prone to any corrupt practises. It must have weighed the case like no other and then arrived at the conclusion. The Court had asked them to pay the surety just to facilitate the purchase by Microsoft. Microsoft has got nothing to do with this. It was Nokia which failed to comply with the laws of the land. There are many foreign companies which have their manufacturing hubs here and are working pretty fine providing employment to many locals. If the Government was indeed corrupt (at least the present Gov't. Is very promising and investor friendly), we wouldn't have had close to $100bn investment proposals from the US, Japan and China. So read and re-read the facts of the case before coming to conclusions. EDIT - And to friends from other parts of the globe, introspect what problems your own country has before making senseless comments.
  • People here don't understand that Posted via Windows Phone Central App
  • Nokia is planning to manufacture Android phones in employee garages as part of its planned return to global dominance.
  • Lol, India....
  • Hey crapple I know where you can get a factory dirt cheap for even higher profit margins
  • Brilliant, India. Just bloody brilliant. Greed = stupidity. Guess you won! ;-)