Nokia global head meets PM over uneven VAT in Maharashtra, MP

The global chief of cellphone maker Nokia, Olli-Pekka Kallasvuo, on Friday met Prime Minister Manmohan Singh and discussed various issues, particularly seeking a uniform tax on mobile handsets across the country.

Handset makers, including world leader Nokia, have been up in arms against the higher value-added tax levied by some states. While four per cent VAT is prevalent throughout the country, Maharashtra and Madhya Pradesh have increased the rate to a swingeing 12.5 per cent.

The Finnish firm, along with other handset makers, has been arguing that higher VAT rate is likely to encourage the grey market. Nokia said it may also hamper states' revenues as customers in Maharashtra and Madhya Pradesh would tend to buy the same phone more cheaply from neighbouring states.

During his 45-minute meeting with the prime minister, Kallasvuo also discussed the many initiatives taken by Nokia to make mobile telephony affordable in rural areas, with schemes like micro finance and introduction of Nokia Life Tools (NLT) targeted at the rural masses.

The company will start selling handsets to poor customers on weekly instalment of Rs100, spread over up to 25 weeks. Pilot projects in Karnataka and Andhra Pradesh have proved successful, and the scheme will be extended to 12 other states.

''We will partner with microfinance companies for this. The pilots were done in the rural areas of Andhra Pradesh and Karnataka across 2,500 villages and received a heartwarming response of over 27,500 applications,'' Kallasvuo said. Under the pilot programme, a microfinance organisation bought handsets from Nokia and sold them to women in rural areas.