Nokia said Tuesday it will suspend manufacturing at its cellphone factory in India after a lengthy dispute with the country’s tax authorities, a setback as India embarks on a high-profile campaign to woo foreign investment. The tax battle prevented Nokia from selling the plant, once one of the Finnish company’s largest factories, employing as many as 8,000 people, to Microsoft along with the rest of its handset business earlier this year.
Nokia will stop production at its mobile handset manufacturing facility near Chennai in south India after a deal with Microsoft to manufacture phones fell through. The factory was among Nokia assets frozen by Indian federal authorities in a dispute over taxes for mobile phone software licenses. It was supposed to have gone to Microsoft as part of its acquisition of Nokia’s phone business in April this year. As a result of the freeze, the company was not in a position to transfer the facility and its manufacturing operations to Microsoft. Nokia instead entered into a “transitional services agreement” to meet Microsoft’s immediate production needs and keep the factory in operation.
