Nissan, Tamil Nadu Dispute Settled Over Unpaid Dues

Nissan agreed to settle long running dispute with Tamil Nadu.

Renault Nissan Oragadam Plant — Tamil Nadu hadn’t paid certain incentives under 2008 agreement to set up car plant

There has been a dispute between Nissan and Tamil Nadu over unpaid dues. The long running dispute finally comes to an end as Nissan agrees to settle.

The Japanese carmaker claimed that they owed Rs. 5000 crores in unpaid dues and damages. For settlement, Nissan will now receive an amount between Rs. 1400-1800 crores.

Tamil Nadu hadn’t paid certain incentives to Nissan under a 2008 agreement. These incentives were offered to the company to set up a car plant in the southern state.

In 2016, Nissan initiated an international arbitration against India for this case. They claimed Rs. 2100 crores for unpaid dues and Rs. 2900 crores for damages and other costs.

Meanwhile, Tamil Nadu was trying to reach a settlement with Nissan for all these years. Tamil Nadu industries minister M C Sampath confirmed that the issue has been resolved.

He says the Japanese automaker has started the process to withdraw the international arbitration. This dispute had raised concerns among investors over the sanctity of contracts.

Nissan along with their partner Renault had set up car manufacturing plant in India. They invested Rs. 6100 crores to set up the plant with an annual production capacity of 4,80,000 units. It has created more than 40,000 jobs.

Currently Nissan holds less than 1 percent of passenger vehicle market share in India. Meanwhile, Renault holds 3 percent.

The settlement is a big relief for the Japanese carmaker. Currently the company is facing dwindling sales and profit. Moreover, the situation has got worse with the pandemic crisis.

This settlement also helps in saving the reputation of the state’s and country’s image. It’ll further boost investor confidence.

M C Sampath clarifies the payout wouldn’t affect state’s finances for dealing with coronavirus crisis. The payment will be made from a separate fund. TN has allocated it for auto sector incentives.