Enforcement Directorate seizes ₹5,551 cr from Chinese smartphone Xiaomi's bank accounts

Enforcement Directorate seizes ₹5,551 cr from Chinese smartphone Xiaomi's bank accounts

"Xiaomi India is a totally-owned subsidiary of China-based Xiaomi group. This amount of ₹5,551.27 crores lying in the company's bank accounts have been seized by the Enforcement Directorate," the agency said in a statement.

"The company has remitted foreign currency equivalent to ₹5,551.27 crores to three foreign-based entities, including one Xiaomi group entity, in the guise of royalty," the ED said. Such vast amounts in the name of royalties were remitted on instructions of Chinese "parent group" entities, the ED has alleged.

The ED has claimed Xiaomi India gets fully built mobile sets and other products from manufacturers in India but had not availed any service from the three foreign-based entities to whom such amounts have been transferred. On Saturday, the Enforcement Directorate said it had seized ₹5,551.27 crores belonging to Xiaomi Technology India Pvt Ltd - a 'wholly-owned subsidiary of China-based Xiaomi group' - lying under provisions of the Foreign Exchange Management (FEMA) Act of 1999. The probe agency said the money was in bank accounts belonging to the Chinese smartphone giant and had been seized in connection with alleged 'illegal outward remittances' in February.

the agency said.

"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 section 4 of the FEMA,"

Enforcement Directorate seizes 5551 cr from Chinese smartphone Xiaomi bank accounts 1Twitter image: @Xioami11

Read More: Central Government asks Electric Vehicle makers to suspend two-wheeler launches.

Xiaomi has also been accused of providing "misleading information" to the banks while remitting the money abroad.

Earlier this month, the agency had summoned a former India head of Xiaomi Corp as part of the probe, sources told Reuters.

It had asked Manu Kumar Jain, former India managing director, for questioning. Neither Jain nor the agency replied to Reuters' request for comments.

Xiaomi told Reuters the company abode by all Indian laws and was 'fully compliant with all the regulations. "We cooperate with authorities with their ongoing investigation to ensure they have all the requisite information."

According to the Reuters report, the ED is probing existing business structures between Xiaomi India, contract manufacturers, and the parent entity in China.

One source told Reuters fund flows between Xiaomi India and its parent entity, including royalty payments, were being checked.

Xiaomi was India's top smartphone seller in 2021, with a 24% market share.

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