Days after it questioned Chinese cellular producer Xiaomi’s world vice-president for alleged foreign exchange violations by the corporate, the Enforcement Directorate (ED) on Saturday seized Rs 5,551.27 crore belonging to Xiaomi Technology India Private Limited below the provisions of the Foreign Exchange Management Act,1999.
Xiaomi India is a completely owned subsidiary of the China-based Xiaomi group. According to the ED, the seized quantity was mendacity within the financial institution accounts of the corporate. The ED had initiated an investigation in reference to the unlawful remittances made by the corporate within the month of February this yr.
Earlier this month, the company had questioned Manu Kumar Jain, Xiaomi’s world vice-president, in reference to the case.
In an announcement, ED stated, “The company started its operations in India in the year 2014 and started remitting the money from the year 2015. The company has remitted foreign currency equivalent to INR 5551.27 crore to three foreign based entities which include one Xiaomi group entity in the guise of Royalty. Such huge amounts in the name of Royalties were remitted on the instructions of their Chinese parent group entities. The amount remitted to other two US based unrelated entities was also for the ultimate benefit of the Xiaomi group entities.”
According to ED, Xiaomi India is a dealer and distributor of cellphones in India below the model title of MI.
ED has seized Rs.5551.27 Crore of M/s Xiaomi Technology India Private Limited mendacity within the financial institution accounts below the provisions of Foreign Exchange Management Act, 1999 in reference to the unlawful outward remittances made by the corporate.
— ED (@dir_ed) April 30, 2022
“Xiaomi India procures completely manufactured mobile sets and other products from the manufacturers in India. The Xiaomi India has not availed any service from the three foreign based entities to whom such amounts have been transferred. Under the cover of various unrelated documentary façade created amongst the group entities, the company remitted this amount in the guise of Royalty abroad which constitutes violation of Section 4 of the FEMA. The company also provided misleading information to the banks while remitting the money abroad,” the ED assertion stated.
