Nissan Seeks $770 Million From India Over Outstanding Dues

Japanese automaker Nissan has sued India for $770 Million over outstanding dues. The company has initiated international arbitration against the Indian government in a dispute over unpaid state incentives.

The first arbitration hearing will be in mid-December, Reuters reported. The notice said that the repeated requests sent by the company to state officials to clear the dues of 2015 were overlooked. A plea was also sent by the company’s chairman, Carlos Ghosn, to Prime Minister Narendra Modi in March last year, seeking the Center’s help, and even that did not help matters.

Nissan sent a notice to Modi in July 2016 where they were seeking payment for the incentive due from the government of Tamil Nadu, which is part of a 2008 agreement to build a car manufacturing unit in the state.

“There is no discrepancy with regard to the amount due, and we are trying hard to resolve the issue,” a senior state official from Tamil Nadu said, according to the news agency.

Soon after the notice was sent to Modi, many meetings were held between central and state government officials as well as Nissan executives. Officials from many ministries had reportedly assured that the automaker earlier that the dues will be cleared and there was no need to file a suit, but in August Nissan asked India to appoint an arbitrator, the report added.

The development is being seen as a possible setback for the government’s efforts to invite more foreign players to invest in the country and create new jobs. It also reflects the many challenges faced by foreign companies in India. There are 20 cases currently pending against India, the highest number of cases against a single country.

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

Nissan has less than 2 per cent share of India’s passenger car market. It builds and sells cars like the Micra hatchback, Sunny sedan and Terrano sport-utility vehicle. It also sells low-cost cars under its Datsun brand.

Over seven years, Nissan and Renault, the French carmaker and its global alliance partner, invested a sum of Rs 61 billion ($946 million) and set up a plant with annual production capacity of 480,000 vehicles in Tamil Nadu. This entitled them to receive the incentives in 2015, said the legal notice.

Nissan’s lawyers also said in the notice that the state government’s decision to not pay the incentive was arbitrary and that made Nissan incur significant losses. In the eight-page notice, the automaker claimed unpaid incentives worth Rs 29 billion and Rs 21 billion in damages, plus interest and other costs.

Tamil Nadu, also known as the Detroit of South Asia, is home to production hubs of many automakers like Hyundai and Ford.