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Enforcement Directorate seizes ₹5,551 crore deposits of smartphone giant Xiaomi Technology India under FEMA

Representational image only. Photo: Twitter/@dir_ed

The Enforcement Directorate has seized ₹5,551.27 crore of Xiaomi Technology India Private Limited under the provisions of the Foreign Exchange Management Act (FEMA), in connection with the alleged illegal remittances made by the company.

Xiaomi India is wholly owned subsidiary of China–based Xiaomi group. “This amount was lying in the bank accounts of the company,” said an official.

According to the ED, the company launched its operations in India in 2014 and started remitting the money from next year. It sent foreign currency equivalent to ₹5,551.27 crore to three foreign–based entities, which include one Xiaomi group entity, in the guise of royalties.

“Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities. The amounts remitted to the other two U.S.–based unrelated entities were also for the ultimate benefit of the Xiaomi group entities,” the agency alleged.

Xiaomi India is a trader and distributor of mobile phones in India under the brand name of MI. It procures the completely manufactured mobile sets and other products from the manufacturers in India; and has not taken any service from the three foreign–based entities to which such amounts were transferred, said the ED.

The agency alleged that under the cover of various unrelated documentary façades created among the group entities, the company sent the amounts overseas in violation of the FEMA. “The company also provided misleading information to the banks while remitting the money abroad,” it said. The ED initiated the FEMA inquiry in February.

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Printable version | May 1, 2022 7:41:40 am | https://www.thehindu.com/news/national/enforcement-directorate-seizes-5551-crore-deposits-of-smartphone-giant-xiaomi-india-for-fema-violation/article65369776.ece