Breaking: ED raids Xiaomi India, attaches Rs 5,551 Cr under Foreign Exchange Management Act

New Delhi:

The Enforcement Directorate announced on Saturday that funds worth over Rs 5,551 crore belonging to Xiaomi India, a Chinese mobile manufacturing company, had been “seized” for breaking Indian foreign currency laws.

Xiaomi Technology India Private Limited (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,” the agency said in a statement.

After the 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).

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 organisations, 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 sent to two other unconnected entities in the United States was also for the benefit of the Xiaomi group firms,” the ED added.

It claims that while Xiaomi India buys fully assembled mobile phones and other products from Indian manufacturers, it has received no service from the three overseas companies to whom the funds were sent.

“The corporation transmitted this amount in the pretence of royalties abroad under the cover of multiple unrelated documentary facades built between the group organisations,” it claimed.

FEMA’s civil law section on “holding of foreign exchange” addresses this issue.

The ED also charged the corporation with giving banks “misleading information” while remitting money abroad.

Manu Kumar Jain, the group’s worldwide vice president, was also questioned by the ED earlier this month at the agency’s regional office in Bengaluru, Karnataka.


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