Finnish telecom giant Nokia has told India’s government that the country is now its “least favourable market” to operate in and it makes better sense to export its products from China, a report said on Friday.
Nokia, which is fighting a 20-billion rupee (HK$2.4 billion) tax demand from Indian authorities, urged the government to “act quickly to correct the wrong perception of India as a place for business”, The Indian Express newspaper reported.
“The political risk of operating in India” has become “suddenly substantially higher and may inevitably influence future decisions to develop one’s operations in India”, Nokia said in a letter quoted by the daily.
The reported warning comes at a bad time for India when foreign direct investment has slowed to a trickle amid mounting domestic economic woes including a plunging rupee, a huge current account deficit, slowing growth and perceived government policy paralysis.
The Finnish group did not immediately respond to requests for comment on the message which The Indian Express said was dated June 19 and was received by the finance ministry last month.
Nokia said its tax problems made it “more cost-efficient for Nokia to transfer the manufacture of mobile phones to China and to import them to the Indian market rather than manufacture them in Chennai”.