Nokia has announced to shut down its South Indian mobile manufacturing facility based near Chennai. The Microsoft owned company will now end manufacturing of devices there as it is among those which were frozen by the Indian law and enforcement over an unsettled tax issue. The Indian federal authorities sealed the factory in a dispute over tax for mobile software licenses.

As a result, the company is unable to operate in any of the ceased factories and also not in a position to transfer the property to Microsoft. Nokia went under a transitional service agreement with Microsoft. To meet the immediate needs of the Redmond giant, Nokia was forced to keep all of its factories running for the Microsoft.

Microsoft will now re-plan its production so as to meet the targets that were declared a few months ago this year. Company said that they are realigning the manufacturing operations and are no longer in need of the manufacturing services offered by the Chennai factory of Nokia.

“In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from 1st November,” Nokia said in a statement Tuesday.

Company has announced that they will now manufacture most of the components in Beijing, China and few other parts of the world. The shut down has significantly affected the production of mobile devices in the country. Microsoft said that they would now be importing most of the products from China. However; they may include an assembly factory here to keep up with India’s growing needs.

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