News from India this week that Nokia and Yahoo are shutting operations and laying off workers has put a damper on PM Narendra Modi’s foreign investment campaign.
Nokia announced yesterday that it plans to shut down its factory in Sriperumbudur, Chennai.
Once the firm’s biggest plant, the factory now houses 900 remaining workers – over 5,000 received their payoffs and left when the Finnish mobile manufacturer was acquired by Microsoft (in a deal valued at £3.2 bn) earlier this year.
The controversial site has been at the centre of a tax dispute with the government concerning payments for the development of software since last year. There is no sign of the situation improving, however, as the Economic Times reports that the remaining employees are now looking to their union to take legal action.
Meanwhile, Yahoo quietly laid off around 500 workers at its high-tech Bangalore facility in the south of the country.
The departing staff, mostly made up of engineers, mark the biggest layoff for the internet giant since it got rid of 2,000 employees worldwide in 2012. This despite the fact that Yahoo made its first acquisition in India just last month when it bought Bangalore-based cloud start-up Bookpad for an estimated $8.3 mn (£5.2 mn).
That’s precisely the type of foreign investment the country’s Prime Minister Narendra Modi has been courting since September with his ‘Make it in India’ campaign. The initiative is a call to investors (both foreign and domestic) to help make India a global manufacturing hub. Modi promised to make a dedicated team to deal with business queries promptly and to ease the country’s strict regulatory processes. The Indian PM echoed those sentiments in New York at the end of last month (where he also spoke at the UN General Assembly) at a meeting with the heads of 11 large US corporations.
The layoffs from major foreign investors such as Nokia-Microsoft and Yahoo have no doubt cast an ominous cloud over the ‘Make it in India’ initiative – and the outlook doesn’t seem to be improving.
It is thought that HP’s major restructuring plans, which will see it split its business into two companies, will affect its operations in India. The tech giant had previously announced that it would be cutting a staggering total of 50,000 jobs.