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Nokia offers voluntary redundancy to employees at Indian factory

Nokia

Nokia is still caught up in a tax dispute in India, but the company has begun offering a voluntary retirement package to workers at a factory which was seized by a local tax office last year. The plant at Chennai has around 6,600 full-time employees, all of which are eligible for the retirement package. Nokia had originally planned to transfer the plant to Microsoft as part of the deal going ahead, but the situation has been complicated by Indian officials challenging Nokia.

The company said in a statement, "as a responsible employer, Nokia is offering a clear financial option for interested factory employees." The plant has experienced arranged hunger strikes by employees in attempts to draw the attention of Indian government to what's occurring with this tricky situation. Nokia has at least offered some light at the end of the tunnel.

It's a major blow as the Cennai plant was a key manufacturing asset, which has left the company with little choice but to move operations elsewhere.

Source: Reuters

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Comments

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dracus_loki says:

Its really sad ,,, that indian govt , tries to make their money these ways

Aman2901 says:

Richard spellin mistake...Indian Factory(in the title)and Chennai(in the last paragraph)...

juanitoriv says:

Are you sure its a spelling error? The Indian factory in Chennai HAS been a huge Factor in the MS/Nokia deal.

I think he meant "factory" No big deal it happens

juanitoriv says:

Freudian Slips often do. 8P

aitt says:

While you're correcting people, correct "spellin" in your comment...

Aman2901 says:

Am not cursing Rich..I noticed..I told him..

rockstarzzz says:

Slang vs getting proper nouns wrong - tomato potato.

aitt says:

Didn't know "spellin" was slang. *shrugs*

sharathu7 says:

its Chennai... spelling mistake...

jason8957 says:

Well, if you had a goose that was laying golden eggs, wouldn't you go and kill it?

Novron says:

That's how socialist infestations work. Kill the jobs, make a government dependent voting block, then tax the hell out of companies to pay for the handouts.

Aman2901 says:

Why kill it and just have handful of eggs..Rather pet it for some more time for more fortune*wink*

paulheu says:

Obviously Nokia can't give in to the extortion practices of the Indian gvnmt. The current workforce at the plant can thank their gvnmt for their unemployment now.

Seriously. This isn't the first time that this money hungry government has attempted to collect more with their ridiculous tax laws causing companies like Nokia to vacate that country. I don't understand how they expected Nokia or any other Finland Co. to pay twice on taxes after they had an agreement with the Finland government to prevent this from happening.

Loco5150 says:

They shouldnt offer anything. Close the factory and let the goverment deal with the mess they created

guillams says:

Sure, you say that cause you're not one of those employees!

Novron says:

Their government, they voted for it.

Exactly. The indian goverment is corrupt! Out to fill their own pockets ignoring the workers who will suffer.

Damn, I was hoping for non-acid comments this time...
Every single government is coruppt only the degree of their corruption varies. And its still NOT clear who's faulty.

ymcpa says:

i think it's fairly clear. nokia isn't the only company with these tax disputes in Indua. There are several large multinational companies dealing with this. Either all these large, well known companies are tax cheats or the government officials are bending laws to get extra tax revenue for the state and possibly lining their own pockets. you decide.

Well, as i read, nokia claims that they manufactured some phones from that factory to export. So they didn't pay taxes for those phones (according to India Finland deal), And paid taxes only for the phones sold in India. But some bureaucrats claim that they sold all phones in India and evaded taxes on some of them (which were exported, as claimed by nokia). Nokia has documents to prove that they were indeed exported and thus, were exempted from taxes. But the case isn't being considered properly, and the documents haven't been considered by the court even.

WittVikki says:

One another Indian company is Sahara

Posted via the WPC App for Android!

Kaushik Dash says:

I am more concerned about the prices of the future devices by Nokia/Microsoft. The import taxes are pretty high, therefore making prices of stuff very high.

Same here, very worried.. So the 930 might come out in India at INR 40,000 or more (assuming they dont charge for the wireless charging).. Just hoping that the remaining factories in India can handle the load of the 8.1 phones. (this factory was mainly for exports btw)

Speaking of votes, I'm sure there are plenty of employees in the factory who didn't vote for Congress.

It isn't directly the fault of the congress, as we all like to think, as it is the visible face of the government machinery. (let me declare first, I'm a congress supporter :P). It is actually the bureaucracy and the government employees who like to cause trouble, it is their way to cause trouble. Yes, the babus are to blame !
P.s.congress isn't involved by far, the issue is with the Tamil Nadu government people, its Jayalalitha's fault. Nokia even wrote to her but she didn't reply.

Novron says:

Their Congress makes the laws. Their courts apply those laws. Indian courts say Nokia has to pay.

I'm not sure what you mean here, but "congress" in India is the name of a political party, which just completed its second term, and is bound to lose the elections this time. What you Americans call congress, we call it the parliament.

Novron says:

Parliament... Congress... Whatever elected body makes the laws.

Actually people above were referring to the congress party, which has been riddled with corruption charges.
Just explaining.. :smile:

Aman2901 says:

+1520..Saksham nice explaination..U pointed out the potential culprits and got the blame off the whole gov.

Well actually its not the government's fault 100%, maybe 20% or so. They should've interfered and got it to be right, India cant afford to lose major companies and employment this way. Its super bad for the country. And kudos (sarcasm) to Ms Jayalalitha for not getting things straight, even when approached by nokia and others. If it couldn't be managed by law (which i seriously doubt), it should've been on humanity basis. And also for the sake of our reputation. But no, we have to show our high handedness, even if it does not benefit anyone.

Loco5150 says:

Their goverment is making this mess themselves period. Nokia wanted to sell the factory to MS and offerd to make a cash deposit so the plant can move to MS. The authorities said its ok, but Nokia needs to pay the money and there is no complaint possibility to any courts. So basically they said admit guilt without any proper court ruling and we let the plant move.

This is a robbery and the plant is a hostage. Now the plant will close because it cant go to MS and Nokia does not make phones anymore.

Close the factory, dont give anything to anyone and let the locals deal with the mess!

Novron says:

I didn't vote for the ACA in the US, I still have to pay for it. They can blame and take it up with their neighbors like I do.

We here in India didn't vote for right to food, education etc (which goes from our tax money). Yet, someone has to think of the poor. Financially comfortable people never like paying for the poor, but the poor like that their facilities are being paid for by the well off people.

Novron says:

Yea, we call them free loaders.

Lol, that's a nice term !

BlackGoku says:

+1 Bleach!Zaraki!

jasongw says:

Yep, masters always appreciate their slaves. And of course, rich people should ALL be slaves, right? After all, why become rich if not so you can enslave yourself to others?

#AltruismFail

OMG55 says:

He's saying it because the Indian government caused this. No one want people to get laid off or factories moving except the Indian govt. Nokia isn't the only major OEM that this govt is fighting

Loco5150 says:

The new 300 million claim is based on the Indian goverment saying that Nokia sold the phones in India and didnt export them. I coulnt find the article with numbers, so sorry, but it was something like this: Indian goverment claims Nokia sold those devices in a particular area. If that would be the case, Nokia would have 100% userbase there, including every child, grandmother and so on.

Run the production down, close the factory and be done with them.

Im very happy with this fact: The main Nokia is not interfering with this mess because now its restricted to Nokia India. This means Nokia India will go bankrupt in the worst case and thats the end of that. They cant make further claims.

And that serves them 100% right, this is a robbery attempt with hostages.

Rockartisten says:

This is people's lives we are talking about. I'm glad Nokia is taking responsibility for their employees and help to soften the blow on the workers in this dispute.

spinzeroWL says:

Nokia are once again proving themselves to be incredibly caring. I wish the world had more businesses like Nokia. Reminds me of when Nokia first started laying off employees in Finland all those years ago. To soften the blow, they offered ANY of their employees that could present a viable business plan up to €100,000 as a parachute payment. Finland is now considered the silicon valley of Europe largely thanks to all the ex Nokia employees that set up companies on the back of these payments.
Good on Nokia for doing the right thing again...and poor form from the idiots in the Indian government that think this will somehow help them get re-elected.
Eurrrgh...politicians!

eshy says:

Most governments try to attract companies to build factories in their states/countries because of the job creation (which includes the support circles around the direct jobs created by a factory).

I'm sure there will be plenty of suitors for a new Nokia/Microsoft plant if they choose to build one elsewhere

SDKevin says:

I guess You've never been to California? :-)

eshy says:

I live in California, and they give tax breaks to companies too just like other states in the US do

ymcpa says:

the tax breaks they give are smaller and the extra regulations and higher income tax rate make California a lousy place to move a business. Tesla won't build its battery plant here, even though they are based in California. Hollywood productions are exiting California at an increasing rate.

Reflexx says:

Production houses are getting killed.

dorelse says:

They absolutely DO give incentive packages to companies wanting to build & hire in CA.  Those incentive packages always include tax abatements, tax reductions, free (or greatly reduced) infrastructure fees, etc, etc.

RyanAMG says:

And how long did our state run companies out of CA before getting it right.

AR2186 says:

They may give them, but its far better for businesses to avoid California for Texas or other states. California is basically the France of the US when it comes to business environment. The reason you see tech companies able to dl so well is its a human capital business, not fixed capital investment

eshy says:

That's also the reason they don't have to give the same tax breaks other states give, but they still need to attract certain businesses. At some point, if the cost difference between California and Nevada or Texas becomes too big, the human capital won't be enough to keep everyone there

dorelse says:

RyanAMG & AR2186 -  I absolutely agree on both your points, I was only responding the assertion that they weren't given (at all)...I agree with you both completely.

jason8957 says:

I don't know why a government would tax businesses at all.  Seems couterproductive.  People are paying the taxes whether you try to tax a business or people.  The people will just pay the business tax in the form of higher prices or lost wages.  But, what do I know.

terrokkinit says:

The moment that happens in the US, I'm applying there. I would LOVE to work for Nokia!

rockstarzzz says:

Hopefully current Indian elections will get rid of this corrupt govt!

That's the writing on the wall.

j_jabbar says:

.....and bring in another!

rockstarzzz says:

It is relative. It is easy for anyone outside of India to look at what Indian National Congress has given India in past whatever years it has single handedly ruled. Whatever thrives in the system has been encouraged or overlooked by Indian National Congress for these many decades. I am sure there are other parties waiting to make it nicer (relatively!) if not totally corruption less country.

MadSci2 says:

This isn't the only double-dealing India pulls. They also use discriminatory patent laws. Honestly, they are driving away certain industries that would otherwise be happy to locate there.

Sarang68 says:

A small correction. Its Chennai, Rich.

Yeah, the last paragraph.

gevabar says:

Bring it to America....let people work there instead of walmart

jgbstetson says:

I don't think most Wal-Mart employees have the "equipment" to work in electronics manufacturing.

eshy says:

Google was already doing that with Motorolla (before they sold it off). Google Glass is manufactured in California. The cost gap between far east manufacturing and US manufactoring is closing so eventually these jobs could come back to the US

The Moto X I believe is being made in a former Nokia plant in Texas.

eshy says:

I know it's in Texas, didn't know it used to be a Nokia plant. The Google Glass assembly line was set up in their Mountain View offices

And what about the phones to be sold in India ? India is bigger market, you know..
This factory catered to the indian market as well, and exporting phones from USA to India isn't a very profitable thing to do i presume...

DJCBS says:

So what? Europe is a bigger market and the factories still left Europe to move to India and China. It has nothing to do with market size. It has more to do with "where can we get the cheapest labour force possible, now that slavery was abolished".

avigyan says:

So tell me, if a major company can move their workplace to a country like India just to get "cheaper labour" and maximize their own profit, they ought to deal with these kinds of tax issues every now and then. If they had to avoid being bugged for money, they could jolly well move to their native land and work there.

batkingnz says:

Stupidest logic of all the comments. You have it.

exkerZ says:

You used like 8 fallacies in the one comment that you made..................

jgbstetson says:

Talk about a lose-lose....

EzraWard says:

I've seen a couple people note corruption in the Indian goverment is the reason for this issue and Nokia's inability to resolve it without paying a huge tax bill. Anyone with more extensive knowledge want to chime in? I can't tell if this dispute is the fault of the Indian government or Nokia.

iyae says:

There was a previous article about this; its the indian governments fault.

riffraffy says:

I think a look at a similar situation with India vs Vodafone will tell you all you need to know. Vodafone's challenge to the Indian tax authorities went to the Indian supreme court--where Vodafone won.

So, India's congress simply voted to change the law--and make it retroactive.
 

mahesham22 says:

As far as I know, there are two disputes.
1. customs claiming that Nokia got duty exemption on their imported software for phone's sold in India, which should have been exported as lee the duty exemption norms.

2. Its with local sales tax department. Don't know the exact issue

AMERICANRAJ says:

I forsee communal violence , Indian Spring and when the people raid the fat cats homes, they will find billions of dollars in basements and gold stashed in the walls. Thank god I left in 1974.

rockstarzzz says:

Nope. Its more civilised than what you are predicting. Most third world countries are more civilised than what we want to see from far far west.

avigyan says:

And you are an NRI right?

mbharat999 says:

Now, as Nokia/Microsoft lost quite a major plant, the Lumia/Surface phones in India will be much more costlier than today due to larger import duties. Nokia/Microsoft might almost lose an emerging but large smartphone market.

mparker says:

They would also be more costly even if Nokia pays up and keeps the plant. The low price of the Nokia phones in India was partly due to Nokia's belief that they did not owe those taxes, and did not include them in the price of the phone.  If Microsoft decides to pay up and keep the plant in operation, the price of future phones will include the new ongoing tax as well as a portion of the back taxes and penalties.  Either way the price of Lumia and Asha phones in India will be going up.

 

xankazo says:

Imposing taxes on every downloaded-paid app on every India made phone? Talk about ridiculous laws.

rockstarzzz says:

Every country charges tax on paid app downloads. I pay about 20p per £1 in the UK.

Tips_y says:

Karbonn, Lava (Xolo), Micromax will probably take up the slack for WP in India.

The Nokia factory in Chennai was ONLY manufacturing feature phones, so no, it doesn't make any difference to Lumia products.

Jas00555 says:

Commentary, DJCBS?

RyanAMG says:

It's not the same without him ;)

DJCBS says:

Calm down, calm down, I'm coming! lol

 

Still, I've said all I had to say about this dispute before. It's actually terribly nice from Nokia to be offering these packages. They could just do what other major corporations would do: shut down the factory, fire everyone and then leave the country, letting only the legal and diplomatic teams resolve this mess the Indian authorities decided to create.

 

As for the loss of the factory in the deal...you know I couldn't care less. Microsoft lost a key factory? Too bad. They have more than enough money to just go to Foxconn and get another factory from them in China. To Microsoft this is a non-problem. 

Jas00555 says:

I still kind of wish that Microsoft could swoop in at the last minute to save the plant, that way, they'll gain tons of love from the Indian people (and we all know they need it), but with the mess that is the Indian government, where not even hunger strikes gain attention, they'll just have to leave this one out.

rockstarzzz says:

Hunger strikes worked with Gandhi, not everyone is the Gandhi, maybe a Gandhi. Also, why would Microsoft lose money to gain goodwill? That is a costlier way to get goodwill!

avigyan says:

To be honest, if MS or Nokia ignores the Indian subcontinent, they might incur a greater loss than this. The Lumia 520 took Nokia's income sky-high only due to the Indian market and if India is dumped as a whole, people will look for alternatives. Android, anyone?

hprvez says:

Yeah the indian market alone made Nokia fabously rich, sure

rohit330 says:

Ridiculous..... Govt cud have taken care of this...

Tips_y says:

The saddest part is that it's the mere employees who get caught in the crossfire. Hope they'll be able to find work right away in case the factory closes down.

rohit330 says:

Such a big plant becoming unusable.. Painful...

donbreathe says:

Nokia should just close the plant and dismiss all the workers since their government is irresponsible. I wonder how most of our leaders think? Maybe they don't use their brain, close the plant since Indian government needs increased unemployment

riteshpande says:

Here in India people praise nokia as a religion

pookyjoralyn says:

title: Indian *factory

Aashish13 says:

Its like every country wants foreign exchange so does India. Inorder that the employees jobs at the manufacturing unit. So dor keeping the ₹ and dollar balance they need to take opportunity to collect money from such foreign direct OEMs. This is the truth

Aashish13 says:

Its like every country wants foreign exchange so does India. Inorder that the employees jobs at the manufacturing unit. So dor keeping the ₹ and dollar balance they need to take opportunity to collect money from such foreign
direct OEMs. This is the truth

Reflexx says:

Nokia doing a solid by offering retirement.

Marco Gomes1 says:

Build a Nokia/Microsoft factory in Portugal. Highly skilled/low wage employees, excellent accessibilities (very good roads, international airports, fine equipped harbours), excellent communications networks (cellular and 4g), very interesting tax exceptions for years, political stability and its easier to buy politics and courts than anywhere else in the EU.

DJCBS says:

LOL True. Apart from the "political stability". Also, it would only be worth it in the first year. After that the Government would come and tax the crap out of the factory and extort as much money as possible. Which is why all the Portuguese corporations have moved their fiscal address to the Netherlands.

DaddyLikey says:

What is voluntary redundancy?

Bee Mon says:

When employees voluntarily resign from the company and get a special pay package instead of facing the chance of being let go later and get nothing.

anantnigam says:

I am an Indian. and i too believe that Indian govt should try to settle this and give nokia the tax benefits. It would be beneficial for both. Give up your greed and think about those 6000 employees.

Nakazul says:

Bring it back home to Finland now.

avigyan says:

Yeah exactly. With the rate at which people are yammering, I would like to see Nokia get equal labour back in Finland. Let's see how they manage.

Ab Ki baar Modi Sarkaar !

rponting says:

The government is twisting arms from what it looks like,...

exkerZ says:

Lol nobody questions Nokia.

Indian central govt only thinks about how to fill their pocket with crores illigally by making new laws. And bringing that money to swiz bank ...congress polititions are ffff

exkerZ says:

Actually, all corporations are invested in the "swiss bank." It isn't just the government.

Nokia reportedly owe the Indian Government outstanding taxes, the gov't want those taxes. I dont agree with the methods being employed by said gov't to recover those taxes.

I couldn't imagine a hunger strike in India. They must be really serious to give up a decent lamb bhuna.

Raj Preeth says:

This puts to conclusion, nokia is shutting down the Chennai factory and moving to Vietnam - Hanoi.