In a statement issued here Nokia said: "Due to the lien on the Nokia handset manufacturing facility in Chennai, the site was left out of the Devices and Services deal with Microsoft, which closed on April 25. As a consequence, Nokia entered into a transitional services agreement (TSA) with Microsoft to address their immediate production needs and keep the factory operational."
"Microsoft has informed Nokia that it will be terminating the manufacturing services defined in the agreement with effect from Nov 1," the statement said.
"In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from Nov 1. Unfortunately, the continuing asset freeze imposed by the tax department prevents Nokia from exploring potential opportunities for the transfer of the factory to a successor to support the long term viability of the established, fully functional electronics manufacturing ecosystem," Nokia added.
Nokia will be informing all stakeholders, including the labour commissioner, of the suspension.
"As a responsible employer, Nokia is currently evaluating options to minimize the impact on existing employees at the manufacturing facility. It will share further information once details have been finalized," the statement said.
At one point of time, Nokia's Indian plant employed around 8,000 workers. Now there are only around 1,000.
Interestingly, the company has not said it is closing down the facility but says that production is suspended.