ED seizes Rs 5,551 crore from Chinese telecom firm Xiaomi in India
Central probe agency Enforcement Directorate (ED) today seized over ₹ 5,500 crores from Chinese smartphone giant Xiaomi over violations of the Indian foreign exchange law. The action has been taken against Xiaomi Technology India Private Limited. The company (also called Xiaomi India) is a trader and distributor of mobile phones in the country under the brand name MI.
The central probe agency had initiated an investigation in connection with "illegal remittances" made by the company in February this year.
"The company has remitted foreign currency equivalent to ₹5,551.27 crores 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 instructions of Chinese "parent group" entities, the ED has alleged. The Company, without having any authorisation, remitted the money — a violation of Section 4 of FEMA.
The amount remitted to the other two US-based unrelated entities was also reportedly for the ultimate benefit of the Xiaomi group entities.
The ED has claimed Xiaomi India gets fully built mobile sets and other products from manufacturers in India under the brand name MI, but had not availed any service from the three foreign-based entities to whom such amounts have been transferred.
Xiaomi has also been accused of providing "misleading information" to the banks while remitting the money abroad.