Nokia To Suspend Handset Production At Its Chennai Plant From November 1

Following termination of mobile purchase agreement by Microsoft and tax disputes, Nokia has announced to suspend production at its Chennai plant from November 1.

"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," Nokia said in a statement.

Nokia had started production at this plant in January 2006, and used to export the products manufactured at this plant to the Middle East, Africa, Asia, Australia and New Zealand.

The Tamil Nadu government had served a Rs-2,400 crore notice to Nokia, saying that the firm had also sold products in the domestic market instead of shipping them overseas.

In another tax case, the Supreme Court had ordered Nokia India to submit a Rs-3,500 crore guarantee before transferring the plant to Microsoft.

"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," the company said.