Finland-based Nokia sold its worldwide handset business for $7.2 billion to Microsoft, but its Sriperumbudur plant was left out of the deal due to tax issues faced by Nokia India. The factory, considered to be among the largest for the company, stopped production from last month.
Talking about the issue at an industry event in Chennai, European Union Ambassador Joao Cravinho said it was an "unfortunate development" as Nokia's plant was very important when it comes to how European companies look at Tamil Nadu as a destination for investment.
"I have not understood why there was no support from the state government (on the issue) which resulted in significant loss of employment" said Cravinho, who is heading a delegation of Ambassadors representing various EU member countries on a three-day visit to Tamil Nadu and Puducherry.
The delegation is studying investment opportunities available in the region and the growth perspective.
Replying to the comments made by Cravinho, Executive Vice-Chairman of state-run Tamil Nadu Guidance Bureau E Velmurugan asserted that state government did not remain a "mute spectator" and tried its level best to revive the plant.
"Tamil Nadu did not remain a silent spectator. We did take lot of measures to revive it but due to tax issues, the factory was left out of the Nokia-Microsoft deal," he said.
Stating that Tamil Nadu government gave "excellent support" to Nokia in terms of providing infrastructure, Velmurugan said, "at one stage, seven mobile handsets were produced every second at the factory which became the largest factory for Nokia.
"The factory which was running in three shifts, also employed 40,000 workers", he said.
Speaking on his visit, Cravinho said discussions on investments and opportunities took place, adding that "on the challenges, we discussed access to power and access to water."
Earlier, the European delegation called on former Tamil Nadu Chief Minister M Karunanidhi at his residence. Commenting on the matter, Cravinho said the delegation regularly meets Opposition party leaders, Chief Minister and Governor.
"Of course, he is a leader of the Opposition party. Whenever we travel, we visit the Chief Minister, the Governor, the leader of opposition, the Assembly speaker and the Business authorities. It is important to get to know the overall sense from a state", he said.
On his visit to Chennai, Cravinho said, "We are ambassadors to whole of India and not to (just) New Delhi.
Tamil Nadu is very important state. It is very important in terms of population, it is important in terms of economic dynamism", he said.
On the impact of Nokia plant closure, Velmurugan said there would be a "slight slip" on the Information Technology exports made from the state due to this development.
"Our exports in IT is close to $11 billion (roughly Rs. 68,079 crores0, second to Bangaluru. But our position slightly slipped after exit of Nokia", he said.