In Alleged Foreign Exchange Violation Case, ED Seizes Rs. 5,551 Crore Of Xiaomi India.
• In 2014, Xiaomi began operations in India.
• Xiaomi Technology India Private Limited has been sanctioned.
• According to the ED, the firm made illicit overseas remittances.
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 a completely owned subsidiary of the Xiaomi Group, based in China. The Enforcement Directorate has confiscated Rs. 5,551.27 crore from the company’s bank accounts “In a statement, the agency said.
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).
“As A Brand Devoted To India, We Ensure That All Of Our Operations Adhere To Local Laws And Regulations.”
We thoroughly examined the order from government officials. Our royalty payments and bank statements, we feel, are all legitimate and accurate.
These royalties were paid by Xiaomi India for in-licensed technology and IPs that were used in our Indian edition products. Making such royalty payments is a legal business arrangement for Xiaomi India.
We are committed, however, to working together with government officials to clear up any misunderstandings.” Xiaomi began operations in India in 2014 and began remitting funds the following year,
according to the company. “Under the guise of royalty, the business has sent foreign cash equivalent to Rs. 5,551.27 crore to three overseas-based entities, one of which is a Xiaomi group entity,” the ED stated.
It was stated that such large sums in the name of royalties were remitted on the orders of their Chinese “parent group” businesses. “The money transmitted to two unconnected entities in the United States was also for the benefit of the Xiaomi group firms,” the ED added.
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.
“The corporation transmitted this sum under the pretense of royalty abroad under the cover of multiple unrelated documentary facades formed between the group entities, which constitutes a violation of section 4 of the FEMA,” it added.
The civil law section in question refers to the “keeping of foreign exchange.” The ED also charged the corporation with giving banks “misleading information” while remitting money abroad.
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