Chinese mobile maker Xiaomi India has been fined Rs. The Directorate of Enforcement said on Saturday that it had seized funds worth Rs 5,551 crore.
The action was taken against Xiaomi Technology India Private Limited. The company (also known as Xiaomi India) is a mobile phone dealer and distributor in the country under the Mi brand name.
“Xiaomi India is a wholly owned subsidiary of the Xiaomi Group of China. The Enforcement Directorate has seized Rs 5,551.27 crore in the company’s bank accounts,” the agency said in a statement.
ED seized Rs 5551.27 crore from M / s Xiaomi Technology India Private Limited in bank accounts under the Foreign Exchange Management Act, 1999 for illegal external payments made by the company.
– ED (dir_ed) April 30, 2022
Funds were seized under relevant sections of the Foreign Exchange Management Act (FEMA) in February after the federal agency launched an investigation against the company over alleged “illegal remittances” sent by the Chinese company abroad.
Xiaomi said it started its operations in India in 2014 and started sending money from next year. “The company has sent foreign currency equivalent of Rs 5,551.27 crore to three foreign-based companies owned by a Xiaomi Group entity in pursuit of royalty,” ED said.
Alleged to have sent such huge sums in the name of royalties on the instructions of their Chinese “parent group” companies. “The amount sent to the other two US-based non-affiliates is also for the ultimate benefit of the Xiaomi Group entities,” ED said.
Although Xiaomi India buys fully manufactured mobile sets and other products from manufacturers in India, it has not received any service from these three foreign-based companies that have transferred such sums. “Under the cover of the cover of various unrelated documentaries created between the group companies, the company sent the money abroad in pursuit of royalties, which violates Section 4 of FEMA.”
Section of FEMA’s Civil Law speaks of “foreign exchange holding”. ED alleges that the company provided “misleading information” to banks while sending money abroad.
Earlier this month, the ED also questioned Manu Kumar Jain, Group Global Vice President at the agency’s regional office in Bangalore, Karnataka.