Xiaomi Violated India’s Foreign Law as the central agency said in a statement on Friday that an authority appointed under the Foreign Exchange Management Act confirmed that the Rs 5,551.27 crore seized by the Enforcement Directorate from the bank accounts of mobile manufacturing company Xiaomi Technology India in April had been illegally transferred out of the country.
Xiaomi India is a wholly owned subsidiary of the Xiaomi Group, which is based in China.
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Section 37A of the Foreign Exchange Management Act designated the chief customs official in Chennai as the competent authority (FEMA). The authority determined that the ED was correct in determining that foreign exchange equivalent to 5,551.27 crore had been transferred out of India by Xiaomi India in an unauthorised manner in violation of the Foreign Exchange Management Act, and that this amount was subject to seizure, according to a press release from the agency.
The Competent Authority appointed under FEMA has confirmed the seizure order of Rs. 5551.27 Crore dated 29.04.2022 passed by the ED against Xiaomi Technology India Private Limited under the provisions of FEMA.
— ED (@dir_ed) September 30, 2022
According to the central agency, the company allegedly remitted funds to one Xiaomi group entity and two others that are based in the United States but benefit the Chinese firm.
The Enforcement Directorate also claimed that Xiaomi India purchased fully manufactured mobile phones and other products from Indian manufacturers but transferred Rs 5,551.27 crore to these three entities despite not using any of their services.
On the other hand, According to the release, Xiaomi began operations in India in 2014 and began remitting funds in 2015. The Enforcement Directorate has also charged the company with providing “misleading information” to banks while remitting funds.
According to the ED, “huge amounts in the name of royalties” were allegedly remitted on the orders of the local unit’s parent group entities in China. “The amount remitted to other two unrelated entities in the United States was also for the ultimate benefit of the Xiaomi group entities,” it stated.
Meanwhile, Xiaomi India had petitioned the Karnataka High Court in July of this year in response to the ED raids and seizures, but the high court had directed the company to first petition the competent authority.
