The two companies have signed a nondisclosure agreement, people familiar with discussions told ET. “Lava’s manufacturing team has already visited the plant and has done the assessment. It will make a proposal to Nokia mid-December after taking all aspects into consideration,” one of the people said. “The tax issue needs to be sorted out before a final deal is sealed though.”
The tax issue, which forced the plant out of Nokia-Microsoft deal still needs to be sorted out though. But, given the new government’s tax stand, Nokia may be hopeful of getting the asset freeze lifted in near-future.
Nokia has also been in talks with contract phone manufacturer Celkon Mobile to strike a lease agreement, but Celkon doesn’t need such huge setup for kind of volumes they have. Lava, on the other hand, plans to setup a domestic manufacturing plant and would prioritize sealing the deal with Nokia for the Chennai plant, if possible. Lava has seen good growth and is now the 3rd largest smartphone vendor in India. It also plans to spend Rs 500 crore for setting up domestic manufacturing unit over next 3-years.