Most countries have more or less given their blessing for the Microsoft/Nokia deal to proceed, but as it stands, India is one of the countries that is still standing in the way of the deal being approved. The reason is apparently due to tax that the Indian government claims Nokia owes them.
The deal could proceed, but only if Nokia is willing to fork out a huge amount of money to pay back the taxes they alleged owe the government, but until they do, the Chennai-based factory owned by Nokia will be held by the Indian government.
There are many implications to this, one of which is that the factory workers could potentially lose their jobs once the Microsoft/Nokia deal is complete since Nokia may no longer have need for the factory. The other is that production will be taken away from the factory and to other parts of the world, which in turn could affect India’s economy, and that’s what exactly Nokia will be doing.
According to reports, it seems that Nokia has decided to move production from its Chennai factory over to China, where they will be manufacturing the Nokia X series of Android handsets. It seems that Nokia is determined to not let their issues with the Indian government hold up the deal, which is why they have decided to move production from India to China instead.
It is unclear if Nokia will ever resolve this issue with the Indian government or what they plan to do with the Chennai-based factory, but for now it looks like the factory will not be part of the Microsoft/Nokia deal.