Telecom Budget: Will Nokia revive Chennai phone plant?

The Union Budget 2014 – presented by Finance Minister Arun Jaitley today – has the potential for the revival of the phone manufacturing facility of Nokia at Sriperumbudur in Chennai.

Pankaj Mohindroo, national president of Indian Cellular Association (ICA), said unsettled cases related to applicability of retrospective amendment which has been affecting Global MNCs should also be brought under the purview of the high level committee.

“This may bring succor to companies like Nokia whose manufacturing facility in Sriperumbudur has almost got closed down due to Income Tax raids and tax demands,” he said.

“Unemployment handed out to 30,000 skilled workers due to loss of production of the Nokia facility could be reversed based on some quick action by the High Level Committee. This sort of interventions would also be helpful in boosting the morale of the investor community and enhance the country’s image as a competing investment destination,” Mohindroo added.

Incidentally, Microsoft did not add the Chennai manufacturing plant of Nokia — as per the revised term sheet — when it completed the $7.2 billion deal to buy phone business of the Finnish company.

Nokia plant chennai

Meanwhile, ICA National President has welcomed the investment friendly Budget presented to the Parliament today.

The reduction of investment target to Rs 25 crore for investment allowance is welcome a move. He said this will give fillip to local production of mobiles which has got a boost following the recent cut in excise on domestic manufacturing.

He suggested that the measure to put import duty of 10 percent on advanced telecom products like Voice Over Internet Protocol (VOIP) with exemption on parts for the manufacture of VOIP phones need further examination.

“While the BJP Government led by Narendra Modi has taken up to create the right eco-system for manufacture of mobile phones, much more needs to be done to win over FDI to flow into the country. For example, the state Governments need to rationalize VAT structures on mobiles, as some States have imposed VAT as high as 12 percent – 15 percent compared to the general IT rate of 5 percent,” Mohindroo added.

[email protected]