The Tamil Nadu Government failed to deliver the promised incentives leading the Japanese carmaker to sue India of Rs 5,000 crores. Nissan initiated this international arbitration after months of a futile back and forth with the State Government.
The Indian Government seems to have mistaken the Japanese carmaker for an Indian National and tried to dupe them. This led to the Japanese carmaker filing an arbitration suit against India.
In July 2016, Nissan sent a legal notice to the Prime Minister of India Narendra Modi. The legal notice stated the payments were left due since 2015. A plea by the company’s Chairman Carlos Ghosn in March 2016, to the Prime Minister seeking federal assistance was also completely ignored.
The Renault Nissan alliance set up a manufacturing plant in Tamil Nadu amounting to Rs. 6,100 crores. The manufacturing plant has a total capacity to produce 4.8 lakh units per year. The automobile group was offered tax incentives by the Tamil Nadu Government to set up the plant in that State. As a part of the Memorandum Of Understanding (MOU) signed between Nissan and Tamil Nadu in 2008, it was agreed the Tamil Nadu Government would extend tax incentives over a period of 21 years.
A Nissan Spokesperson said, “Nissan is proud to play a role in the Make in India effort and we have created over 40,000 jobs in India, directly and indirectly, and contributed to the economic growth of Tamil Nadu where we have invested around a billion dollars.”
Nissan sent an eight page notice to the Prime Minister of India claiming unpaid incentives and damages plus interest amounting Rs. 2,900 crore and Rs. 2,100 crore respectively.
Cairn Energy, Vodafone and Deutsche Telecom are few of the companies with International arbitration cases against the Indian Government.
Last year in London, a Japanese company NTT DoCoMo, won a $ 1.2 billion arbitration suit against an Indian company Tata Sons in relation to a failed telecom investment.
Indian Government faces over 17 International arbitrations against them.
