Lagatar24 Desk
New Delhi, April 30: The Enforcement Directorate announced on Saturday that funds worth over Rs 5,551 crore belonging to Xiaomi India, a Chinese mobile manufacturing business, had been “seized” for breaking Indian foreign currency laws.
Xiaomi Technology India Private Limited is the target of the action. The company (also known as Xiaomi India) is a mobile phone merchant and distributor in India under the Mi brand.
“Xiaomi India is wholly owned subsidiary of China-based Xiaomi group. This amount of Rs. 5,551.27 crore lying in the bank accounts of the company has been seized by the Enforcement Directorate,” the agency said in a statement.
ED has seized Rs.5551.27 Crore of M/s Xiaomi Technology India Private Limited lying in the bank accounts under the provisions of Foreign Exchange Management Act, 1999 in connection with the illegal outward remittances made by the company.
— ED (@dir_ed) April 30, 2022
After a federal agency initiated an investigation into the company in February for alleged “illegal remittances” transferred outside by the Chinese firm, the funds were seized under applicable parts of the Foreign Exchange Management Act (FEMA).
Xiaomi began operations in India in 2014 and began remitting funds the following year. “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,” the ED said.
It was stated that such large sums in the name of royalties were remitted on the orders of their Chinese “parent group” businesses.”The amount remitted to other two US-based unrelated entities were also for the ultimate benefit of the Xiaomi group entities,” the ED said.
It stated that while Xiaomi India purchases fully assembled mobile phones and other products from Indian manufacturers, it has not received any services from the three foreign-based firms to whom the funds were transferred.
“Under the cover of various unrelated documentary facade created amongst the group entities, the company remitted this amount in guise of royalty abroad which constitute violation of section 4 of the FEMA,” it said.
The civil law section in question refers to “holding of foreign exchange.” The ED also charged the corporation with giving banks “misleading information” while remitting money abroad.
Manu Kumar Jain, the group’s global vice president, was also questioned by the ED earlier this month at the agency’s regional office in Bengaluru, Karnataka.
