Over 5,500 crores of Chinese smartphone giant Xiaomi seized by ED over forex violations

Mangalore Today News Network

New Delhi, April 30, 2022: The Enforcement Directorate (ED) has seized Rs 5,551.27 crore of smartphone giant Xiaomi India under the provisions of Foreign Exchange Management Act (FEMA), 1999. Xiaomi India is a wholly owned subsidiary of the China-based Xiaomi group.

 

The ED had initiated an investigation in connection with the illegal remittances made by the company in February this year.

According to the Enforcement Directorate, Xiaomi started its operations in India in 2014 and started remitting the money from 2015.

"The company has remitted foreign currency equivalent to Rs 5,551.27 crore to three foreign-based entities which include one Xiaomi group entity in the guise of royalty. Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities,” ED has alleged in a statement.

The amount, officials added, remitted to other two US-based unrelated entities was also for the ultimate benefit of the Xiaomi group entities.

Xiaomi India is a trader and distributor of mobile phones in India under the brand name of MI. Xiaomi India procures the completely manufactured mobile sets and other products from the manufacturers in India.

ED has also alleged that Xiaomi India has not availed any service from the three foreign-based entities to whom such amounts have been transferred.

“Under the cover of various unrelated documentary façade created amongst the group entities, the company remitted this amount in guise of royalty abroad which constitute violation of the FEMA. The company also provided misleading information to the banks while remitting the money abroad,” added ED statement.

Courtesy: India Today