Nokia's Tax Dispute with Indian Authorities Threatens Export Market
Published on: 22nd Apr 2014
By: Ian Mansfield
An Indian trade association is warning that the ongoing legal uncertainty over Nokia's handset factory in the country could have a serious impact on the country's exports of telecoms equipment.
Nokia is fighting a tax dispute, and the authorities have seized the factory as an asset pending the resolution of the dispute. Nokia has also offered voluntary redundancy to many of its 8,000 employees as the company scales back production.
The Telecom Equipment & Services Export Promotion Council has warned that with that single factory representing 70 percent of India's handset exports the ongoing dispute could affect the country's balance of trade in telecoms.
According to TEPC data, telecom equipment exports from India declined about 7 per cent to Rs 19,654 crore in 2013-14 from Rs 21,075 crore in the previous year.
Handsets account for around half the total value of exports, and Nokia dominates the handset export market.
Nokia has previously said that if it cannot resolve the dispute before the Microsoft sale is concluded then it will seek to operate the factory as a 3rd-party contractor supplying to Microsoft.
The Microsoft deal is expected to complete at the end of this week.