Under the terms of the Foreign Exchange Management Act, 1999, the Enforcement Directorate (ED) confiscated Rs 5,551.27 crore from Xiaomi Technology India Private on Saturday in connection with the company's illicit external transfers.The money was taken from Xiaomi India's bank account, according to the Enforcement Directorate of India.Xiaomi India is a wholly-owned subsidiary of the Xiaomi Group, which is situated in China.
This isn't the first time Xiaomi has been embroiled in a situation like this.The ED launched a probe into the company's unlawful remittances in February of this year.
"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 Rs 5,551.27 crore to three foreign-based entities which include one Xiaomi Group entity in the guise of royalty,"- according to ED.
It also states,“Xiaomi India procures completely manufactured mobile sets and other products from Indian manufacturers.” Xiaomi India has not used any of the services provided by the three foreign-based entities to which such funds have been transferred. The company remitted this amount in the guise of royalty abroad under the cover of various unrelated documentary façades created among the group entities, which constitutes a violation of Section 4 of the FEMA. In addition, while remitting money abroad, the Company provided misleading information to banks.”
The business stated in reaction to the following transaction that,“these royalty payments made by Xiaomi India were for the in-licensed technologies and IPs used in our Indian version products.” Such royalty payments are a legal commercial arrangement for Xiaomi India. We are, however, committed to working closely with government officials to clear up any misunderstandings.”
The ED had previously called Manu Kumar Jain, Xiaomi's global vice president, for interrogation in connection with an inquiry into possible violations of the foreign exchange legislation. Allegations of currency law violations at the Chinese company's Indian branch over the previous five years are being probed.
Jain, Xiaomi's former India CEO, has been requested to provide various financial records related to the firm either appearing in person or sending them through an approved agent on Wednesday.
"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 Rs 5,551.27 crore to three foreign-based entities which include one Xiaomi Group entity in the guise of royalty,"- according to ED.
It also states,“Xiaomi India procures completely manufactured mobile sets and other products from Indian manufacturers.” Xiaomi India has not used any of the services provided by the three foreign-based entities to which such funds have been transferred. The company remitted this amount in the guise of royalty abroad under the cover of various unrelated documentary façades created among the group entities, which constitutes a violation of Section 4 of the FEMA. In addition, while remitting money abroad, the Company provided misleading information to banks.”
The business stated in reaction to the following transaction that,“these royalty payments made by Xiaomi India were for the in-licensed technologies and IPs used in our Indian version products.” Such royalty payments are a legal commercial arrangement for Xiaomi India. We are, however, committed to working closely with government officials to clear up any misunderstandings.”
The ED had previously called Manu Kumar Jain, Xiaomi's global vice president, for interrogation in connection with an inquiry into possible violations of the foreign exchange legislation. Allegations of currency law violations at the Chinese company's Indian branch over the previous five years are being probed.
Jain, Xiaomi's former India CEO, has been requested to provide various financial records related to the firm either appearing in person or sending them through an approved agent on Wednesday.
ED has seized Rs.5551.27 Crore of M/s Xiaomi Technology India Private Limited lying in the bank accounts under the provisions of Foreign Exchange Management Act, 1999 in connection with the illegal outward remittances made by the company.
— ED (@dir_ed) April 30, 2022
In December of last year, the Income Tax Department searched Xiaomi and a few other Chinese mobile manufacturing businesses on suspicion of tax cheating.
RSS Feed
