India seizes $ 725 million worth of Siomi assets for illegal remittances

Employees stand next to the company logo at the Xiaomi store in Shanghai, China on November 1, 2021. REUTERS / Aly Song / Files

Sign up now for unlimited free access to Reuters.com

New Delhi, April 30 (Reuters) – India on Saturday said it had seized $ 725 million from local bank accounts of China’s Xiaomi Corporation. (1810.HK) Following the investigation, it was discovered that the smartphone maker had illegally sent money by paying royalties to foreign companies.

The Directorate of Enforcement has been investigating the business practices of a Chinese company suspected of violating Indian foreign exchange laws. read more

The Financial Crimes Prevention Agency said on Saturday that Xiaomi Technology India Pvt. Royalty “blanket of payments.

Sign up now for unlimited free access to Reuters.com

The company added in a statement that remittances to two unidentified and unrelated US-based companies were “for the ultimate benefit of the Xiaomi group companies”.

“Such large sums in the name of royalty were sent on the instructions of their Chinese parent group companies,” the directorate said.

Xiaomi said in a statement on Saturday that it believes it complies with Indian laws and that “all reports on royalty payments and banking are legitimate and truthful.”

“These royalty payments made by Xiaomi India, for the licensed technologies and IPs used in our Indian edition products … We are obliged to work closely with government officials to clarify any misunderstandings,” it added.

The Directorate’s action against Xiaomi was signaled against a detailed review by a Chinese smartphone maker, whose Indian office was raided in December in a separate investigation into alleged tax evasion. Some other Chinese smartphone markers were also tested at the time.

See also  Oil prices have been falling since Tuesday as supply concerns returned

On April 12, Reuters reported that Manu Kumar Jain, the former Indian head of Xiaomi, had been summoned for questioning as part of the directorate’s investigation. read more

Jain, who is now the global vice president of Dubai-based Xiaomi, appeared before investigators earlier this month, a source who knew directly about the investigation and asked not to be named because of the sensitivity of the matter.

The Enforcement Directorate has also asked the company for information on foreign finance, stocks and financial systems, financial statements and key executives who run the business.

Xiaomi was India’s leading smartphone retailer by 2021, with 24% market share, according to Counterpoint Research. South Korea’s Samsung was the No. 2 brand with a 19% stake.

Many Chinese companies are finding it difficult to do business in India due to political tensions following the border conflict in 2020. India has cited security concerns in banning more than 300 Chinese applications, including popular ones such as TicTac, and tightened rules for Chinese companies to invest. In India.

Sign up now for unlimited free access to Reuters.com

Aditya Kalra’s statement in New Delhi; Editing: William Mallard, Helen Popper and Mike Harrison

Our standards: Thomson Reuters Trust Principles.

Leave a Reply

Your email address will not be published.