Nissan Sues Indian State for Failure to Pay Promised Incentives

Nissan Motor Co. has gone to an international tribunal in a $775 million dispute over unpaid incentives promised by the Indian state of Tamil Nadu nine years ago, sources tell Reuters.

Nissan agreed to build a 61 billion-rupee ($945 million) auto plant in Chennai, the state capital, in exchange for tax refunds and other incentives worth 29 billion rupees ($450 million).

Nissan opened the factory in 2015 but says those promised payments have not been made. The carmaker also seeks 21 billion rupees ($325 million) for damages, interest and other costs.

Multiple meetings with federal ministry officials earlier this year produced promises of action but no result, Reuters reports. A source says Nissan has since pushed for local arbitration, and a first hearing is scheduled for mid-December. A senior Tamil Nadu official agrees the amount due is not in dispute and claims the state is “trying hard” to resolve the issue.

The Chennai factory has the capacity to produce 480,000 vehicles per year. The facility currently makes the Nissan Micra hatchback, Sunny sedan and Terrano SUV, plus several of the company’s Datsun-brand entry-level models.