NEW DELHI: Salcomp, one of Apple’s major component suppliers, has bought Nokia ’s defunct handset factory near Chennai for close to $30 million (Rs215 crore), setting the stage for the revival of what was once India’s poster child for local manufacturing but which was shut down in late 2014 after a tax dispute between the Finnish company and local authorities.“We are happy to confirm that we have reached an agreement with Nokia for the purchase of their facility in Sriperumbudur near Chennai,” Salcomp said in an emailed statement to ET.“We thank the authorities for their cooperation and support thus far and remain hopeful of their continuing support as we secure necessary clearances to complete the transaction at the earliest, and restart manufacturing from this factory building,” the company said.A Nokia spokesperson also confirmed the deal.Salcomp is expected to begin operations at the plant by March next year, and ramp up exports from there to about $2 billion by investing $300 million over the next five years, said a person familiar with matter.Once fully functional, the new unit is expected to generate employment for close to 10,000 people, another person said. Salcomp currently operates two units in the same special economic zone in Sriperumbudur where it employs close to 7,000 people.Salcomp’s acquisition of the handset manufacturing plant — it was once the world's largest, producing 100 million handsets a year and employing some 12,000 people — coincides with iPhone maker Apple’s strategy to expand production in India for the local and global markets. Apple is gradually shifting away from China amid the Sino-US trade war. The American company sources chargers from Salcomp, which is the largest player globally and which has made India a huge base over the past few years.“Apple’s components would comprise a lion’s share, of up to 60% (of production), in the 1.1 million sq ft plant — and the balance would be for others including Foxconn , Xiaomi, Vivo and Oppo,” a second person said.Apple’s major contract manufacturers, Wistron and Foxconn, have also been ramping up investments in the country. The iconic smartphone major’s other component suppliers such as Flex, Sunwoda Electronic Co, CCL Design (Suzhou) and Shenzhen Yuto Packaging Technology have also set up units in India and are manufacturing parts and accessories here.The Nokia handset plant, set up in 2006, at its peak was the world’s largest and showcased India’s local manufacturing prowess. But since 2013, when the India issued a Rs2,500 crore withholding tax demand on the company, Nokia, along with Vodafone Group and Shell, was also identified with the aggressive stance of India’s tax authorities, causing an uproar among foreign investors. The plant was shut in November 2014, after it was left out of Nokia’s deal to sell its devices business to Microsoft earlier that year due to the tax dispute.Subsequently, Finland initiated Mutual Agreement Procedure (MAP) proceedings in 2013. The company had also sought to initiate arbitration under the Bilateral Investment Promotion and Protection Agreement in 2014. But it did not pursue it after the Indian government’s response through the MAP route. The BJP-led government which came to power in 2014 under Prime Minister Narendra Modi made the revival of the plant among its key agenda items.In March 2018, India and Finland reached an accord under the MAP, under which Nokia paid Rs 1,629 crore as a rectified tax demand to New Delhi. A Rs 10,000 crore-tax demand, raised on Nokia Corp after the initial demand wasn’t paid, was dropped. The settlement paved the way for the eventual sale of the plant.“The Sriperumbudur SEZ is seeing a revival on a larger scale, with Foxconn restarting its unit and Salcomp purchasing a string of units in the 200-acre SEZ,” another official told ET.He said that the moves had come in the backdrop of the ongoing US-Sino trade war which was compelling investors to look for favourable investment destinations outside of China, with India’s recent corporate rate tax cut announcement coming as a shot in the arm.Harsh Vardhan Singh, a former deputy director-general of the World Trade Organization, said companies like Salcomp could actually export in even higher multiples from India, provided the country rapidly addressed the disabilities in manufacturing.“We did a detailed study over the last six months on this issue and found that India suffers a 9-12% disability as compared to Vietnam and nearly 19-21% where China is concerned. This needs to be addressed via incentives for handsets and component exports to take off from India,” he said, referring to a study undertaken by industry body Indian Cellulars & Electronic Association and Ikdhvaj advisors LLP.The revival of the Nokia facility is welcome news and will boost component exports to global value chains. But without a WTO complaint replacement to the 4% MEIS, the handset and component exports will never take off from India. RodTEP may prove to be grossly insufficient in this case. A new and better scheme must be put in place at the earliest.