Foxconn wants nothing to do with Nokia's legal and financial troubles

NEW DELHI: Taiwan's Foxconn has set out three key demands with Nokia for taking over its Chennai plant, including immunity from all legal tangles and financial liabilities the Finnish company faces in India, which would need to be backed by the government.
According to people aware of the discussions between the two companies, Foxconn, the world’s largest contract manufacturer, has also asked that Nokia seeks 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.
“Some key demands include complete exclusion from legal issues and financial liabilities Nokia faces in India, getting assurance from the government on this account...besides lifting the asset freeze on the plant,” one of the people said. “The SEZ, or part of it, would have to be converted into a DTA for making it usable for anyone,” another person aware of the discussions said.
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.
This eventually led to the plant being shut down in late 2014 and loss of more than 12,000 jobs.

For fructifying 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 fleshed out proposal to top executives at the Taiwanese company, one of the people said.
Nokia declined to comment on details of its deal-making strategy and moves. “We are hopeful that the Indian government will approve and fully support, without delay, the legal transfer of the facility should an agreement be reached between Nokia and a suitable buyer,” a Nokia spokesperson told ET, underpinning the fact that any transfer of the Chennai facility will require that the government’s asset freeze be lifted.
Foxconn declined to comment on specifics but said it continues to consider investments in India if they make commercial sense and if they fit the needs of its customers.
“Details regarding any new investments will only be announced once decisions have been made and all necessary approvals have been received,” the company added.
If any deal goes through, Foxconn will be buying or leasing the asset, which is the factory, and not the legal entity.