Nokia sold its mobile phone business to
Microsoft in April, but it was forced to leave the Indian
factory out of the deal due to the tax dispute with Indian
authorities. It continued to operate the factory as a contract
manufacturing unit for Microsoft.
"Microsoft has informed Nokia that it will be terminating the
manufacturing services defined in the agreement with effect from
Nov. 1. In absence of further orders from Microsoft, Nokia will
suspend handset production at the Sriperumbudur facility," Nokia
said in a statement on Tuesday.
Nokia's business now includes network equipment, navigation
technology and patents.
The plant in Chennai was among Nokia's biggest for making
handsets but has suffered after the company got caught in the
tax dispute.
In April Nokia introduced a voluntary retirement scheme at the
factory after a review in which it considered the
"predictability and stability of the regulatory environment" in
countries where it operates. At that time the plant employed
about 6,600 full-time workers.
An asset freeze imposed by the tax department stops Nokia from
"exploring potential opportunities for the transfer of the
factory to a successor to support the long-term viability of the
established, fully functional electronics manufacturing
ecosystem," the company said.
(Reporting by Nivedita Bhattacharjee in Mumbai and Jussi
Rosendahl in Helsinki; editing by Jane Baird)
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