India's Department of Telecom has proposed incentives including a 10-year tax waiver on the production of telecom equipment including mobile phones, as part of efforts to stimulate the domestic telecom manufacturing sector.
The DoT has also proposed that the freeze on Nokia's Chennai manufacturing plant be lifted and that value added tax (VAT) rates be reduced, DNA Indiareported.
The ministry is aiming to create a favorable environment for the domestic production of telecom equipment.
At present only a quarter of mobile devices sold in India are manufactured in the nation, and the local industry is not geared to meet the anticipated surge in demand for new devices.
If accepted, the decision will be a relief for Nokia. The vendor was forced to shut down its Chennai manufacturing plant in November after its assets in the country were frozen as part of a tax dispute with the Indian government.
The company was also forced to leave the plant out of the sale of its devices business to Microsoft as a result.
Last month, Chinese manufacturing giant Foxconn was reported to be considering buying the Chennai plant as part of a $2 billion investment in the Indian market.