Nokia keen to settle tax dispute without arbitration
NEW DELHI: Telecom equipment maker Nokia extended an olive branch to the Indian government, saying it wants to resolve an ongoing tax dispute amicably and that arbitration is not a priority. The Finnish firm also underlined India’s potential as a manufacturing hub, saying the dispute aside, it has had a fruitful experience in the country and other multinationals should set up shop to reap the benefits.
“There are better ways to resolve those (tax) issues (than arbitration) and we would like to exhaust those options first,” Barry French, executive vice president of marketing and corporate affairs at Nokia, told ET in an exclusive interview. He said India was “incredibly important” and would remain so after the 150-year-old company completes its acquisition of Alcatel-Lucent.
French said the multi-billion dollar tax issue was complex and would take time to be resolved. Nokia will try to settle through the ongoing legal process or mutual agreement procedure under a double-taxation avoidance agreement with Finland.
The comments mark a change in Nokia’s stance towards resolving the 20,000 crore-odd tax dispute after authorities froze its assets in India and prevented transfer of its Chennai handset manufacturing plant to Microsoft, which acquired its devices business globally last year.
Nokia, based in Espoo, Finland, sent India an arbitration notice, while highlighting the tax case could create negative sentiment among foreign investors, who have cited cases involving Nokia, Vodafone and Cairn, among others, to view India with suspicion when it comes to policy certainty and clear tax laws.
As late as in April 2015, Nokia had sought Prime Minister Narendra Modi’s intervention to get the asset freeze on its factory lifted. Now, things seem to have changed. “We have seen the right desire to resolve the issues,” French said. The BJP-led government is “proactive in thinking of solutions, recognising it is a very complex situation.” Arbitration, besides taking time and being expensive, creates “a lot of noise that is not in the best interest of anybody, particularly when India is looking at focusing on Make in India,” French said, underlining India’s potential as a manufacturing hub.
“Our overall experience in India, setting aside taxation issues, in terms of the quality of people, the infrastructure, has been very good. We would encourage every company to come and manufacture here,” he added. “To those who don’t because maybe they are nervous about India, because they don’t understand India, we will say you should take the plunge and come here.”
Policy uncertainty and tax disputes should not be the only factors to consider while deciding whether to invest in India because there are benefits, he said.
Nokia, which CEO Rajeev Suri is transforming from a handset maker to a full-scale networks provider, has large-scale software development and manufacturing facilities here. With over 12,000 people, India is the company’s largest employee base.
The South Asian nation will become even more critical once Nokia merges global operations with Paris-based Alcatel-Lucent, set to close in first half of 2016. The combined entity will be the world’s largest maker of mobile-phone network equipment.
“While we have seen a good growth in the consumption of mobile data, the backbone of being able to provide that kind of bandwidth is a lot about IP (Internet protocol). The Alcatel-Lucent acquisition will certainly help us building the initiative around smart cities and Digital India, which has a lot about building IP,” French added.
