According to reports, the Enforcement Directorate (ED) seized Rs 5551 crore from Xiaomi Technology India Pvt Ltd for violating the Foreign Exchange Management Act, 1999. The firm allegedly gave incorrect information to banks while sending money overseas, violating FEMA’s Section 4.
China’s Xiaomi Group owns Xiaomi India. In 2021, Xiaomi was India’s top smartphone seller with a 24% market share. In connection with the company’s illegal remittances, the ED launched an investigation in February 2022. Read More Xiaomi’s new MIUI 13.5 Update was released in India
What is the ED allegation on Xiaomi India?
It is reported that Xiaomi’s operations in India began in 2014, and money started being sent in 2015. Under the guise of royalties, the company allegedly transferred foreign exchange equivalent to Rs 5000+ crore to three foreign companies.
In India, Xiaomi India sells and distributes mobile phones under the brand name MI. Xiaomi India purchases complete mobile sets and other products from manufacturers in India. Xiaomi India did not utilize any services provided by the three foreign entities to whom the amount was transferred according to the ED.
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ED asked former managing director Manu Kumar Jain to answer questions. Reuters did not receive a response from Jain or the agency.
In an interview with Reuters, Xiaomi claimed the company was in full compliance with all Indian laws. “We are cooperating with authorities with their ongoing investigation to ensure they have all the requisite information.”