The government has approved a Rs 675 crore (Rs 6.75 Special Economic Zone by Finnish telecom major Nokia near Chennai.
The government on Wednesday granted approval to Nokia, Wipro, Hewlett Packard, Reliance, Biocon, Ranbaxy Laboratories, Mahindra and Mahindra, Reliance energy and Adani Group's to set up Special Economic zones.
Even as Left parties have demanded a review of the tax concessions provided to SEZs, the DoT has sought extension of excise duty exemptions to industrial units set up in telecom-specific SEZs.
While the tax holiday for the factory coming to an end might be a factor, many say the business model of Microsoft (which acquired Nokia's handset division last year), as well as freebies offered by the Vietnamese government, might also have played a role.
Indian and Finnish finance ministry officials on Tuesday discussed Nokia's Rs 21,153 crore (Rs 211.53 billion) tax dispute case and reviewed the double taxation avoidance agreement.
Around 55 per cent of land in the 36 operational special economic zones (SEZs) in Tamil Nadu is lying vacant owing to various reasons, including the recent economic slowdown.
The Income Tax department has informed the Delhi High Court that Nokia India and Nokia Corporation owe it Rs 21,153 crore (Rs 211.53 billion) as total tax liability (existing and anticipated), including penalty during a seven-year period from 2006-2013.
Unions will 'fight to death' if company 'decides' to shut Chennai factory.
While leading SEZs like Mahindra World, Nokia, Apache, Hyderabad Gems and Jewellery became operational in 2008-09, exports from these zones fell short of target of Rs 1,20,000 crore (Rs 1,200 billion) in the last fiscal, according to the Export Promotion Council for EOUs and SEZs.
The development comes at a time when growing tension in US-China trade ties is forcing companies to explore alternative manufacturing sites in order to derisk operations.
Tax problems and unfavourable WTO agreements are making Tamil Nadu's electronics corridor less attractive to companies.
One of Apple's suppliers, Salcomp, will invest Rs 2,000 crore over the next five years to make components at a Nokia plant in Chennai. The facility, which has been closed for nearly 10 years, will be revived and made operational from March 2020.
Foxconn, a leading Taiwan based manufacturer of connectors for use in personal computers and printed circuit boards for mobile phones, will set up $110 million plant in Chennai to manufacture mobile handset and other components..
According to research firm Counterpoint, Apple was one of the fastest-growing brands in India during the December quarter. This was driven by multiple price cuts on its XR device, thanks to local manufacturing in India, it had said. It added that the rollout of new iPhones (11 series), aggressive pricing and a good channel strategy was helping Apple gain market share in India.
The Taiwan-headquartered manufacturer has said it would invest around $5 billion in Maharashtra
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