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iPhone manufacturer Foxconn eyeing Nokia's Chennai plant: Sources

iPhone manufacturer Foxconn eyeing Nokia's Chennai plant: Sources
BY:jaikishan sharma

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NEW DELHI: Foxconn, which makes iPhones and iPads for Apple and the Kindle for Amazon, has emerged as a possible buyer for Nokia's defunct Chennai factory as the world's largest electronics contract manufacturer looks to invest around $2 billion in India. This comes within weeks of fastgrowing domestic handset maker Lava being reported to be interested in acquiring the plant, once the world's biggest phone-making facility.

In a related development, the telecom and IT ministry has proposed to the revenue department that Nokia be allowed to sell the plant, currently frozen in a tax dispute, without passing on the legal liability to the buyer, people familiar with the matter told ET. "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 current dispute, as it stands, is lose-lose for both parties. Nokia can't sell, but if the plant and machinery goes to waste, the tax department will also not be able generate anything out of it."

He was referring to the dispute, now in court, between Nokia and the government that prevented the Finnish company from transferring the factory to Microsoft as part of a global $7.2-billion deal to sell its devices business to the US company. The factory closed after Microsoft decided to stop using it from November 1 as a contract manufacturer for its devices, putting thousands out of work.

The telecom and IT ministry has already held discussions with the revenue department on the matter, the official added.

Foxconn is looking at investing around $2 billion in India, which would include the plant, according to people familiar with the matter. "What makes Foxconn's investment plans even stronger is that one of its chief Indian clients, Micromax, is believed to have expressed its intention of sourcing as much as 25% of production if Foxconn were to take over the plant," one of them said.

Micromax's current lineup of handsets is made by Foxconn, mostly in mainland China.

Moreover, Foxconn's unit that was serving as a vendor to the Nokia plant has been hit by its closure. A purchase by Foxconn could see this unit get a new lease of life, possibly re-employing many who were forced to retire or got laid off, the people said. Foxconn India mainly made mobile phone panels for Nokia India and set up shop in the Special Economic Zone near Chennai about eight years ago.

Apart from Apple and Amazon, Foxconn's clients include brands such as Hewlett-Packard, Dell and Microsoft's Xbox. Foxconn didn't respond to ET's emailed queries while Micromax refused to comment on "speculations." "We don't comment on market speculations. However, we will definitively consider any options that subscribe to Make in India opportunities," said a spokesperson for Micromax. Nokia confirmed it had been approached by parties interested in buying the Chennai facility.

"But due to confidentiality reasons we will not comment further on this topic," a spokesperson said in an email.

A deal to sell the plant, once regarded as a showpiece of India's manufacturing capabilities, to Foxconn will act as a boost for the government's Make in India initiative.

"We are trying to promote India as an electronics manufacturing hub and the Chennai plant is a great opportunity for us to leverage," said the official cited above.

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