New Delhi, July 7: The centre has allowed international telecom giant Nokia to import cellular phone handsets through its 100 per cent Indian subsidiary, Nokia Telecom Pvt Ltd, for sale in the domestic market.

The clearance by the Foreign Investment Promotion Board (FIPB) to Nokia Telecom follows an assurance by Nokia that it would set up a local manufacturing facility for manufacture of cellular phone handsets. The company has said in its application to the board that it will import cellular phone handsets for two years to test the local market, after which it will finalise its plans for a manufacturing facility. Nokia plans to import the handsets from group companies abroad.

In its revised application to the FIPB, which has been supported by the department of telecommunications, the company has also made it clear that it would retain in India the profits which accrue from sale of handsets in the domestic market.

There would be an outflow of foreign exchange on account of dividend for the first three years, the revised application says. The company has said that it had worked out plans to expand its area of operations, and has already conducted feasibility studies on the possibility of setting up a local manufacturing facility for cellular mobile phones in the country.

Nokia Telecom has an approved equity capital of $3 million (about Rs 11 crore). The company's proposal to set up a 100 per cent owned subsidiary was cleared by the government last year. The company proposes to expand the equity base to $10 million (over Rs 35 crore) over 10 years. Nokia Telecom's earlier application seeking approval for import and export trade had been turned down by FIPB on the grounds that the original clearance granted to the 100 per cent subsidiary was only for undertaking joint ventures and business of telecom in India. Nokia has identified India as a focus area. The company also plans to set up a research and development (R&D) base in India for export of software.Nokia is one of the major players in the domestic market in the cellular phone handset market with one of its model being a best-seller.

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