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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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Reader comments

Nokia offers voluntary redundancy to employees at Indian factory

125 Comments

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.

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.

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.

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.

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)

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.

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.

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

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.

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!

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.

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

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

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.

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.

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!

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

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

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.

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.

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

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

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.

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.

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.

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.

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

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...

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".

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.

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.

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.
 

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

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.

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.

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.

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.

 

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. 

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.

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!

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?

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.

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

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

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

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.

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.

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.

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.

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.

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

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.