Xiaomi says all operations in India ‘compliant’ with laws after ED seizure | Latest News India

Xiaomi issued a statement on Saturday after the Enforcement Directorate seized ₹5551.27 crore of Xiaomi Technology India Pvt Ltd on charges of violating the Foreign Exchange Management Act. The company said as a brand committed to India, all its operations are “firmly compliant with local laws and regulations.”

“We have studied the order from government authorities carefully. We believe our royalty payments and statements to the bank are all legit and truthful. These royalty payments that Xiaomi India made were for the in-licensed technologies and IPs used in our Indian version products. It is a legitimate commercial arrangement for Xiaomi India to make such royalty payments. However, we are committed to working closely with government authorities to clarify any misunderstandings,” the statement said. 

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The ED has accused the company of providing “misleading information” to the banks while remitting the money abroad, a transaction that the agency claimed to be illegal. 

“Xiaomi India is wholly owned subsidiary of China-based Xiaomi group. This amount of ₹5,551.27 crore lying in the bank accounts of the company has been seized by the Enforcement Directorate,” the ED said in a statement. The probe into Xiaomi India’s operations was launched a few months back and the global vice president of the group, Manu Kumar Jain, was interrogated by the agency early this month. 

Xiaomi started its operations in India in 2014 and started remitting the money from the next year, ED said. “The company has remitted foreign currency equivalent to ₹5,551.27 crore to three foreign-based entities which include one Xiaomi group entity, in the guise of royalty,” the ED said alleging that 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,” the ED said.

The agency said while Xiaomi India procures completely manufactured mobile sets and other products from the manufacturers in India it has not availed any service from these 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 guise of royalty abroad which constitute violation of section 4 of the FEMA,” it said.