Wednesday, April 17, 2024

ED seizes over Rs 5,550 crore of Chinese smartphone giant, Xiaomi India

The Enforcement Directorate (ED) has seized over Rs 5,550 crore of Chinese smartphone giant Xiaomi India over alleged foreign exchange violations by the company.

The Enforcement agency tweeted today saying, “ED has seized Rs.5551.27 Crore of M/s Xiaomi Technology India Private Limited lying in the bank accounts under the provisions of Foreign Exchange Management Act, 1999 in connection with the illegal outward remittances made by the company.”

ED, which initiated the investigation in connection with illegal remittances made by the company in February, seized the amount from the company’s bank account. 

“Xiaomi India is a wholly-owned subsidiary of the China-based Xiaomi group. This amount of ₹5,551.27 crores lying in the bank accounts of the company has been seized by the Enforcement Directorate,” the agency said in a statement.

ED has alleged that the company has remitted foreign currency equivalent to ₹5,551.27 crores to three foreign-based entities, which include one Xiaomi group entity in China, in the guise of royalty. The other two entities are based out of the USA.

Xiaomi India has not availed any services from the 3 entities which were beneficiaries of these huge transactions. Such huge amounts in the name of royalties were remitted on instructions of the Chinese parent group, the ED has alleged. Xiaomi is also accused of providing misleading information to the banks while transferring this money abroad.

ED, which is probing the company since February, had earlier asked Manu Kumar Jain, former India managing director, to appear before the agency for questioning in the case.

According to the Reuters, the ED is probing the existing business relationship between Xiaomi India, contract manufacturers, and the parent entity in China.

Xiaomi was also slapped with notices for evading Rs 653 crore in custom duty earlier this year. 

The Finance Ministry on Wednesday issued three show-cause notices to Chinese phone maker Xiomi’s India unit,  Xiaomi Technology India for evading customs duty by way of undervaluation. 

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