Nokia says it won't leave India despite tax dispute, threats to move manufacturing to China

Nokia is campaigning for greater clarity in India, but it's not planning to pull out of the country for now.

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India may be its "least favourable" nation thanks to an ongoing tax dispute with the Indian government , but Nokia says it remains committed to the country.

In a letter sent by Nokia to the Indian government, published this week but dated from June, the company suggested it could dump its Indian manufacturing facility and move the work China, complaining that the Indian government's tax claims against it and other multinational companies "have too great an impact on the predictability and certainty of Indian business environment to be ignored", according to the Indian Express.

The letter is the latest twist in the saga of a 20 billion rupee tax bill that Indian authorities demanded from Nokia in March .

According to the paper, a memorandum of understanding (MoU) signed by Nokia and the Tamil Nadu state government last year should have meant Nokia was refunded the four percent VAT it pays on phones made at its Chennai facility and sold in India.

But, Nokia writes in its letter, the state failed to issue a government order in line with the MoU, and without this, it has become more cost efficient to manufacture mobiles for the Indian market in China instead.

Nokia confirmed in a statement that it has been in talks with the government, but that it also remains committed to India after securing a government order.

"Nokia can confirm that it has been in discussions with the central government and state government over ways to bring greater clarity to the business environment in India. These discussions have been both constructive and productive, and both sides have worked in a true spirit of cooperation. Evidence of this is the Tamil Nadu government's recent issuing of a Government Order to us," Nokia said in a statement.

"Nokia is committed to India. The country is a priority market for us, and Chennai plays an integral part in our global manufacturing strategy. To date, Nokia has invested $285m in its manufacturing operations in Chennai, providing direct and indirect benefits for tens of thousands of residents."