Xiaomi India assets worth Rs 5,551 crore seized

The Enforcement Directorate (ED) today seized Rs 5,551.27 crore belonging to Xiaomi Technology India Private Limited under the provisions of the Foreign Exchange Management Act (Fema), 1999. This comes days after the agency questioned the Chinese mobile manufacturer’s global vice-president for alleged forex violations by the company,

Xiaomi India is a wholly-owned subsidiary of the controversial Xiaomi group of China, several digital companies of which are under the scanner of various intelligence agencies across the world. According to the ED, the seized amount lay in the bank accounts of the company. The ED had initiated a probe in connection with the illegal remittances made by the company in February.

Earlier in April, the ED had questioned Manu Kumar Jain, Xiaomi’s global vice-president, in connection with the case.

In a statement, ED said, “The company started its operations in India in the year 2014 and started remitting the money from the year 2015. The company has remitted foreign currency equivalent to INR 5551.27 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. The amount remitted to other two US-based unrelated entities was also for the ultimate benefit of the Xiaomi group entities.”

The ED says that Xiaomi India is a trader and distributor of mobile phones in India under the brand name MI.

“Xiaomi India procures completely manufactured mobile sets and other products from the manufacturers in India. 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 façades created amongst the group entities, the company remitted this amount in the guise of Royalty abroad which constitutes a violation of Section 4 of the Fema. The company also provided misleading information to the banks while remitting the money abroad,” the ED statement said.