Nissan sent a legal notice in 2016 to Modi’s administration claiming compensation about their Tamil Nadu agreement deal in 2008 to set up a car manufacturing plant in India. In 2008 Nissan and Renault agreed to set up a plant for car manufacturing in India Tamil Nadu. With a production capacity of 480000 cars per year, it would have created 40000 jobs as well.
The Japanese car maker Nissan in 2016 in its legal notice to Modi’s administration claimed 29 billion rupees for the unpaid incentives and also added 21 billion rupees for the damages, other costs and interest for the investment. The Tamil Nadu government was trying to settle down the matter but failing, again and again, to reach an agreement.
All obligations would be honored
The statement given by the principal secretary to the Tamil Nadu government industry department was hope in finalizing an agreement. He said that “All obligations would be honoured. If both decided to make an agreement and finalized a deal, then Nissan who has about 1% share. In the passenger manufacturing industry in India would withdraw its case for compensation.
The permanent court of attribution in Singapore has refused India’s plea argument. India stated that the court has no jurisdiction to rule the case brought against India by Nissan. If India had won the plea in the court, then this case should have been thrown. The Indian government is out of many options now they might go for the plea in Singapore court.
The case against alleged violation
The case is against the violation of the CPEA comprehensive economic partnership agreement. This agreement is holding up Nissan because it gives protection against the investment in India. India, according to the sources, agreed to the arbitration in Singapore. India filed a plea in Singapore court about the authority of rule the case because it was tax related.
But the international tribunal denied the objections of India on 29th April 2019. It has an order of 140 pages, and it says that tribunal has the authority to rule on this particular matter even tho it is tax related and all whatsoever. The final hearing of the case would be in February 2020 after both parties provide the evidence and their side of the story.
India has to pay a big price
Well, Nissan, in its statement about the case, said that “continue to work with the government to resolve the issue.”
But if India losses the case against Nissan, then it has to pay a huge amount. There are chances that India has to pay the entire claimed amount to Nissan, 50 billion Rupees.
It would be in better interest to India to resolve the matter with Nissan. And came to an agreement; otherwise, Nissan has a strong case, and India might be guilty on this one.