Nokia shutters its Chennai plant; workers get Rs7.5 lakh package

Work at Nokia Chennai plant came to an end at the end of the day today under a tripartite settlement reached at a meeting of Nokia India Thozhilalar Sangam - the workers' union - the company management and the labour commissioner's office on Thursday.

Nokia's Chennai plant has been forced to shut down after Microsoft Corporation, which bought out Nokia's entire mobile phone business in September last year (See: Microsoft to acquire Nokia's handset business for $7.1 bn), excluded the Chennai plant due to a pending tax litigation between the government and Finnish company (Nokia completes deal with Microsoft sans Chennai plant).

The workers will get a severance package of Rs7.5 lakh and a lump sum of Rs1 lakh each, sources said. In addition, the Nokia management has agreed to pay salaries for November and December as well, sources said.

The plant located at Sriperumbudur, which has been manufacturing phones since 2006, will cease production with effect from 1 November and the 912 employees and 28 clerical and contract staff remaining in the Nokia unit will cease being in Nokia's employment.

In March this year 5,000 out of the total 6,600 employees had in opted for a voluntary retirement scheme offered by Nokia (Nokia's Chennai plant sees 5,000 opting for VRS).

At its peak, the factory employed around 8,000 people directly, over 50 per cent of which were women while over 30,000 people, including vendors, were dependant on the factory for their livelihood.

The average age of the worker was around 25 and most of them are those who opted for a job than after passing HSC with 60 per cent or more marks.

The workers allege India-born CEOs of Microsoft and Nokia - Satya Nadella and Rajeev Suri, respectively, have cheated them.
 
Commentators say Nokia's closure will also be a big blow to Prime Minister Narendra Modi's 'Make in India' campaign.

Nokia's Chennai plant was once its biggest manufacturing facility in the world, and exported mobile phones to markets, including the Middle East and Africa, Asia, Australia and New Zealand.

In March, the Tamil Nadu government served a Rs2,400-crore notice on Nokia, saying the firm had also sold products from the Chennai plant in the domestic market instead of shipping them overseas.

Nokia, the once-leading mobile phone maker, had since sold its devices and services (D&S) business, including its India assets, to Microsoft Corporation, $7.2 billion.

However, due to legal issues related to tax by the Indian government, the Chennai facility could not be transferred to Microsoft in the deal. Hence, the US tech giant decided to close it.

The Supreme Court had, in a separate case, on 14 March, ordered Nokia India to give a Rs3,500-crore guarantee before it transfers the plant to Microsoft.

Nokia then entered into a transitional services agreement with Microsoft to address their immediate production needs and keep the factory operational.

"Microsoft has informed Nokia that it will be terminating the manufacturing services defined in the agreement with effect from 1 November 2014. In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from 1st November," Nokia had earlier said in a statement.