New Delhi: In a crackdown on the Chinese firm Xiaomi, the Enforcement Directorate (ED) on Saturday seized more than 5,000 crore of its assets for alleged violations under foreign remittances.
The ED in a statement said that it has seized Rs 5551.27 crore of Xiaomi Technology India Private Limited lying in the bank accounts under the provisions of Foreign Exchange Management Act (FEMA) 1999, for alleged illegal outward remittances.
Xiaomi is a Chinese smartphone maker and commands a strong market share in the Indian smartphone market.
“The seized amount of Rs 5551.27 crore is lying in the bank accounts of Xiaomi Technology India Pvt Ltd, which started its operations in India in 2014 and started remitting the money in 2015. The Company has remitted foreign currency equivalent to Rs 5551.27 crore to three foreign-based entities which include one Xiaomi group entity in the guise of Royalty,” said the ED.
“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 were also for the ultimate benefit of the Xiaomi group entities,” said the ED.
Xiaomi India is a trader and distributor of mobile phones in India under the brand name MI. Xiaomi India procures the completely manufactured mobile sets and other products from the manufacturers in India.
“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 facade created amongst the group entities, the company remitted this amount in the guise of royalty abroad which constitutes a violation of Section 4 of the FEMA,” said the federal agency.
