Finnish mobile handset major Nokia has said it would set up a manufacturing plant in Chennai with an investment of up to $150 million to meet the booming demand in the country.
The construction work for the plant will start this month and production is likely to begin in the first half of 2006.
The expansion of the plant will see an intake of approximately 2,000 employees after production is in full swing, the company said in a statement adding it anticipates investing an estimated $100-150 million in the plant.
The Chennai unit will be Nokia's tenth mobile device production facility globally and will roll-out India-specific entry level and mid and upper end GSM and CDMA handsets.
Earlier, Nokia president Pekka Ala-Pietial had called up Telecom Minister Dayanidhi Maran to inform him about the company's board decision on selecting Chennai as the site.
Welcoming the decision, Maran said: "This is the result of efforts of the Communications Ministry and the subsequent formation of an inter-ministerial task force in October last year with a view to coordinate with the state governments."
Maran had earlier said Nokia Board is scheduled to meet here in May and expected to disclose further details.
This also coincides with the inauguration of Elocteq manufacturing facility in Bangalore on April 11. Positive signals are coming from other mobile manufacturers too, Maran said.
Government expects $800-900 million FDI in telecom manufacturing segment in the current fiscal.
"Mobile penetration in Asia-Pacific is expected to be a major contributor to the global mobile subscriber base surpassing the two billion mark by the end of 2005. Therefore, India which is set at the heart of the region, where mobile communications is growing rapidly, was a natural location of choice for the new production facility," the statement said.
Establishing a new factory in India is an important step in the continuous development of our global manufacturing network. Skilled labour, friendly business environment, support from state government, good logistics connection and overall cost efficiency criteria made us choose Chennai, Pietila said in the statement.
There are about 52 million wireless customers in India and the number is expected to cross 80 million by December 2005. More than 37 million handsets are likely to be sold in India in 2005, with the annual number rising to 50 million by 2008.
Nokia is the leader in India's $2.5 billion handset market, believed to have about 45 per cent market share. Other players include Samsung, LG Electronics Inc and US major Motorola.
Korean major LG recently set up a mobile phone plant in Pune.