ED Seizes Rs 5,551 Crore Deposits of Smartphone Giant Xiaomi India for FEMA Violation


Funds value over Rs 5,551 crore of Chinese cellular manufacturing firm Xiaomi India have been “seized” for violating the Indian overseas trade regulation, the Enforcement Directorate stated on Saturday. The motion has been taken in opposition to Xiaomi Technology India Private Limited. The firm (additionally known as Xiaomi India) is a dealer and distributor of cellphones within the nation underneath the model title MI.

“Xiaomi India is a 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. The seizure of funds has been done under relevant sections of the Foreign Exchange Management Act (FEMA) after a probe was launched by the federal agency against the company in connection with alleged “illegal remittances” despatched overseas by the Chinese agency in February.

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Xiaomi started its operations in India in 2014 and started remitting the money from the next year, it said. “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. Such huge amounts in the name of royalties were remitted on the instructions of their Chinese “parent group” entities, it alleged. “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 said while Xiaomi India procures completely manufactured mobile sets and other products from the manufacturers in India, it has not availed any service from these three foreign based entities to whom such amounts have been 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. “Holding of overseas trade.” The ED also accused the company of providing “misleading information” to the banks whereas remitting the cash overseas.

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Earlier this month, the ED had additionally questioned the worldwide vp of the group, Manu Kumar Jain, on the company’s regional workplace in Bengaluru, Karnataka.

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