Foxconn Technology Co Ltd (TPE:2354) is planning to invest in India a huge amount of $2 billion. The manufacturer Apple Inc. (NASDAQ:AAPL)’s iPhones and iPads and Amazon’s Kindle could be the possible buyer of the Nokia’s plant in Chennai that was left out of the deal with Microsoft due to some taxation issues.
Nokia’s Chennai plant used to be the world’s biggest phone making facility at one point in time and was being considered for buying by the domestic phone maker Lava, few weeks after which Foxconn too expressed its interest in buying it.
Nokia may be allowed to sell the plant
ET got to know from few people familiar with the matter that the revenue department has been approached by the telecom and IT ministry requesting them to allow Nokia Corporation (ADR)(NYSE:NOK) to sell the Chennai plant without transferring the tax liability to the buyer. “The proceeds from the sale (of the plant) could be deposited into an escrow account, which, upon the final court ruling, can go to the winner,” a senior government official told ET.
The source further informed that the current state of dispute will not allow Nokia to sell the plant, and this would lead to lose-lose situation for both. The dispute would lead to the wastage of plant and machinery and even the tax department will not be able to generate anything out of it.
The dispute is between Nokia Corporation (ADR)(NYSE:NOK), and the Indian government over some tax dues, and because of this dispute Nokia had to leave out the plant from its deal with Microsoft. The said facility was put out of use by Nokia Corporation (ADR)(NYSE:NOK) beginning November 1 and it became the root cause of unemployment of thousands.
Why should Foxconn invest in India?
A person familiar with the matter said that Foxconn has been approached by Micromax with an offer of buying 25% of the production if the Apple supplier buys the plant in Chennai. This gives Foxconn an even stronger reason to invest in India as Micromax is one of its chief clients. The current lineup of handsets from Micromax is made by Foxconn in China majorly.
After the closure of Nokia’s plant, Foxconn Technology Co Ltd (TPE:2354) unit that was serving it as vendor has been severely hit. People are too in favor of this acquisition because they believe once acquired by Foxconn a new life will be breathed into the unit, which would also provide employment to many.
