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Old 1st December 2017, 11:03   #1
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Default Nissan sues India over outstanding dues

A recent news item in " The Hindu" has revealed that Japanese automaker Nissan Motor has begun international arbitration against India to seek more than $770 million in a dispute over unpaid state incentives.

Quote:
In a legal notice sent to Prime Minister Narendra Modi last year,
Nissan sought payment of incentives due from the Tamil Nadu government as part of a 2008 agreement to set up a car manufacturing plant in the southern state.

According to the notice, Nissan said repeated request to state officials for payment, due in 2015, were overlooked and even a plea by the company's chairman, Carlos Ghosn, to Mr. Modi in March last year seeking federal assistance did not yield any result.
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Complete Link: http://www.thehindu.com/business/Ind...le21239412.ece

Last edited by navin : 1st December 2017 at 15:34. Reason: minor typo
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Old 1st December 2017, 11:41   #2
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Default Re: Nissan sues India over outstanding dues

They invested 946 million dollars in seven years and are expecting 770 million in arbitration process. Even with 40000 jobs created, I am not sure of the contribution of company to the state economy.

Its a simple case of accountability that lacks on state government's part. I am not sure they would have cared about these things given all the other exciting things thats happening.
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Old 1st December 2017, 12:16   #3
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Default Re: Nissan sues India over outstanding dues

Quote:
Over seven years, Nissan and Renault invested 61 billion rupees ($946 million) and set up a plant with annual production capacity of 480,000 vehicles, which entitled them to receive the incentives in 2015, according to the legal notice.

In that notice, Nissan's lawyers said the state government's decision to not pay was “arbitrary”, and Nissan has “incurred significant and increasing losses”.

Nissan did not specify the business impact in the 8-page notice, but said in 2008 that state incentives were critical to the project's viability and sustainability.

The carmaker, in its notice, is claiming 29 billion rupees in unpaid incentives and 21 billion rupees in damages, plus interest and other costs.
So they invested Rs61billion in setting up a factory and is now claiming back Rs.50billion plus interest?

Last edited by Sankar : 1st December 2017 at 12:22.
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Old 1st December 2017, 12:34   #4
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Default Re: Nissan sues India over outstanding dues

If only Nissan showed the same amount of interest in building business, delivering better cars, capturing more customers; they would have probably been in a position to ignore such incentives. Although, any corporate, irrespective of the size would never let go of incentives. Anything to add to the bottom line.

In fact, if Nissan had grown in size, it would have been in a significantly better position to claim incentives. They would have the leverage of finance/labor on their side, which would significantly impact election outcomes.

I hope this news article does not make a lot of noise, particularly in international media. It does not bode well with Make in India initiative and inspiring investor confidence.
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Old 1st December 2017, 13:01   #5
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Default Re: Nissan sues India over outstanding dues

Whatever the case maybe, it is bad PR for India, for sure.

If I simplify it, the Tamil Nadu government promised several incentives to Nissan, including tax refunds.

Nissan says, it was eligible for the said incentives and refunds in 2015. The amount is 29 billion rupees.

And, in typical Indian fashion, it is also being made to run for the 'payment' as we all do too.

Heck, Carlos Ghosn even asked Modi for assistance.

All this came from a Reuters report and the other international media will pick it up soon.

Bad PR for India. And worst for the Make in India initiative.

Last edited by GTO : 1st December 2017 at 13:21. Reason: Carlos :)
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Old 1st December 2017, 13:09   #6
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Default Re: Nissan sues India over outstanding dues

Every business exist for making money. They have their shareholders to answer to. From that point of view, if there tax rebate due to Nissan, they have the legal rights to ask for it and the Govt needs to honor it. Why, if i am eligible for an Income Tax rebate, I would obviously expect the payment to be made into my account. The longer this matters gets prolonged, it is definitely bad PR for India, as the outside world would be seeing us not in terms of states but as a country who has not kept its investment incentive promises.
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Old 1st December 2017, 13:10   #7
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Default Re: Nissan sues India over outstanding dues

The GOI should sue Nissan for using sub-standard diesel engines in Indian cars, it is the right time to put their outdated 1.5 dci engine under the scanner.
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Old 1st December 2017, 13:27   #8
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Default Re: Nissan sues India over outstanding dues

For a change, I'll agree with Nissan. If a promise was made, it must be kept. Prima facie, it does appear that the money is due. Bargain down the interest and pay the principal.

Quote:
Originally Posted by deehunk View Post
The GOI should sue Nissan for using sub-standard diesel engines in Indian cars, it is the right time to put their outdated 1.5 dci engine under the scanner.
Are you kidding me? The 1.5L DCI has amazing driveability & fuel economy. It's one of the best things about my Sunny. Yes, it's not revv-happy and feels old, but the engine does what it was built for. The DCI is also a known long-termer with several Logans having done 2 - 3 lakh km without a rebuild.

If anyone should be sued for sub-standard engines, it's VW (emissions), not Nissan.
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Old 1st December 2017, 14:37   #9
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Default Re: Nissan sues India over outstanding dues

Incentives to car manufacturers should ideally be in the form of -

- Free land on lease
- Tax holiday for X years (on components and finished products)

For Nissan, perhaps applying industrial grade grease on the palms of bureaucrats and politicians will work better than arbitration.
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Old 1st December 2017, 15:08   #10
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Default Re: Nissan sues India over outstanding dues

In 2008, when Nissan and its global alliance partner, French carmaker Renault, agreed to invest in setting up a car plant in Chennai, the state government promised several incentives including some tax refunds.

Over seven years, Nissan and Renault invested ₹ 6100 crores ($946 million) and set up a plant with annual production capacity of 480,000 vehicles, which entitled them to receive the incentives in 2015, according to the legal notice.

According to the notice, Nissan said repeated requests to state officials for the payment, due in 2015, were overlooked and even a plea by the company's chairman, Carlos Ghosn, to PM Modi in March of last year seeking the centre's assistance did not yield any results.

The notice, sent by Nissan's lawyers in July 2016, was followed by more than a dozen meetings between centre and state officials and Nissan executives, said the person familiar with the matter, who did not want to be named as it is not public.

The central officials, from several ministries, assured Nissan the payment would be made, and it should not bring a legal case. But, in August, Nissan gave India an ultimatum to appoint an arbitrator, the person said, adding the first arbitration hearing will be in mid-December.

A Nissan spokesman said the company was "committed to working with the government of India toward a resolution," but did not elaborate.

A senior Tamil Nadu state official said the government hoped to resolve the dispute without having to go to international arbitration. "There is no discrepancy with regard to the amount due, and we are trying hard to resolve the issue," the official told Reuters.

The case, brought against India for alleged violations of its Comprehensive Economic Partnership Agreement with Japan, is the latest in a string of international arbitration proceedings against the country by investors concerned about issues ranging from retrospective taxation to payments disputes.

There are over 20 cases pending against India, among the highest against any single nation.

https://auto.ndtv.com/news/nissan-su...illion-1782269
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Old 1st December 2017, 16:05   #11
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Default Re: Nissan sues India over outstanding dues

I don't know why people are mixing up the discussion point with Nissan's engine, cars, business decisions etc.

Quote:
Originally Posted by OrangeCar View Post
I hope this news article does not make a lot of noise, particularly in international media. It does not bode well with Make in India initiative and inspiring investor confidence.
I wish it does. GOI should understand that it can't make policies/changes arbitrarily. If it doesn't bode well to "make in India", then nobody else is to blame but GOI. Lot of damage was already done in the Vodafone case.
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Old 1st December 2017, 16:56   #12
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Default Re: Nissan sues India over outstanding dues

http://www.newindianexpress.com/busi...y-1702519.html[/quote]


India facing over 17 cases of international arbitration

India’s move to insert safeguards against offshore litigation follows the initiation of more than 17 cases of international arbitration against it by global companies including Vodafone and Deutsche Telecom under bilateral investment agreements with various countries.

Many of these offshore arbitrations allege tax terrorism by Indian authorities for the retrospective tax notices against several global companies, while some were triggered by the SC’s cancellation of the 2G licences.

“India is unlikely to reverse any policy affecting investments made by foreign investors on Indian soil…We don’t normally roll back say foreign direct investment caps in any sector…however, if something necessitates rollbacks then the BIPPAs (bilateral investment protection and promotion agreements) will protect the government against offshore arbitration…there will also be protection against allegations of tax terrorism,” a top official told The Hindu .

The U.S. is keen to sign the Bilateral Investment Treaty (BIT) to provide comfort to American companies that they will not be treated unfairly in India. India sees it as another way of making itself a more attractive destination to foreign investors.

The commercial and strategic dialogue will be held on September 21-22 in Washington, just days before Mr. Modi lands in the U.S. to attend the UNGA. In particular, in the talks held on Friday, the two sides looked at similar agreements India has already concluded. While the U.S. preferred a model BIT close to the India-Japan CEPA, Indian officials pushed for something closer to the Canadian investment treaty. “The final model BIT could be somewhere between those two,” one official source said.

http://www.thehindu.com/todays-paper...cle7445066.ece

Last edited by GTO : 2nd December 2017 at 09:20. Reason: Quoted post deleted
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Old 1st December 2017, 18:27   #13
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Default Re: Nissan sues India over outstanding dues

@ deehunk

I completely agree with you Deehunk, the whole case and the compensation amount seems highly suspicious. With the Micra being produced in India being phased out in most of its export markets, and no other significant products in the pipeline, Nissan India is probably looking at excuses to wind up their India operations.
If there were tax breaks promised , and even if they are entitled to receive 100% refund of taxes paid so far, have they really paid Rs.5000 crore to the state exchequer ?

Last edited by GTO : 2nd December 2017 at 09:19. Reason: Quoted post deleted
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Old 1st December 2017, 19:28   #14
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Default Re: Nissan sues India over outstanding dues

Please go through this article : Reuters

Reuters did confirm with a TN Govt official before publishing the report.

He confirms, that there is no discrepancy with regard to the amount due. And that he hopes that the issue gets resolved before going to international arbitration.

It appears, Nissan does have a case here.

With the sales performance of the company been lower than expected, desperately asking for the incentives makes even more sense.

In order to survive, it has to get money from somewhere. And, they must have factored in the incentives while planning for funds to fuel their operations.

I do not know how much does upgrading to BS-6 emission norms costs, but I doubt it will force a company to hatch a false case against the government of a country. A country where it has invested 61 billion rupees.
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Old 1st December 2017, 20:04   #15
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Default Re: Nissan sues India over outstanding dues

Quote:
Originally Posted by ashutoshb View Post
With the sales performance of the company were lower than expected, desperately asking for the incentives makes even more sense.

I do not know how much does upgrading to BS-6 emission norms costs, but I doubt it will force a company to hatch a false case against the government of a country. A country where it has invested 61 billion rupees.
I understand this is not a false case, but why now? What were their strategies to achieve ROI? They are claiming 50% of initial investment by incentives, was this the reason for their lacklustre attitude since 2008. How do they say that decision is "arbitrary"? They should have focussed their efforts on building a strong customer base after investing so much of money. There is something unknown to the people.

Last edited by deehunk : 1st December 2017 at 20:12.
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