Foxconn demands legal and financial exclusion, SEZ to DTA conversion from Nokia

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Taiwan’s Foxconn has set out three key demands with Nokia for taking over its Chennai plant, including license from all legal mess and financial accountability the Finnish company faces in India, which would need to be helped by the government.

By Baishakhi Dutta

According to people conscious of the deliberations between the two companies, Foxconn,has also asked that Nokia pursues conversion of the special economic zone (SEZ) where the phone manufacturing factory is situated, or part of it, into a domestic tariff area (DTA), so that phones produced there can be sold within India.

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The Nokia factory in Sriperumbudur, Chennai, which could ship out 100 million handsets a year at its peak, was not part of the $7.5-billion buyout of Nokia’s global phone operations by Microsoft back in 2014, due to an ongoing Rs 21,000-crore tax dispute between the Finnish company and local tax authorities, which led to the factory being frozen.

For pollinating a deal with Foxconn, Nokia will need to reach out to the Indian government, specifically the departments of revenue, income tax, commerce and electronics & IT, and then send a proposal to top executives at the Taiwanese company, as reported by an official.

Nokia however refused to remark on the details of its deal-making strategy and moves.

On the other hand Foxconn dismissed to critise on particulars but surmised that it continues to consider investments in India if they make commercial sense and if they fit the needs of its customers.

If any deal goes through, Foxconn will be buying or leasing the asset, which is the factory, and not the legal entity.

 

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