New Delhi: The Enforcement Directorate (ED) is tightening the noose on Chinese smartphone maker Xiaomi. ED has attached Rs 5,551 crore of Xiaomi Technology India Pvt Ltd (Xiaomi India) under FEMA. Xiaomi India is a wholly-owned subsidiary of the China-based Xiaomi Group.
In a statement issued in this regard, it was said that the Enforcement Directorate has carried out this action under the Foreign Exchange Management Act, 1999 in the fraud committed by the company. The seized amount was lying in the bank account of the company. The ED had started probing in the case of illegal remittances made by the company in February this year. Earlier, the ED had summoned Xiaomi’s Global Vice President Manu Kumar Jain.
According to ED officials, the company started operations in India in the year 2014 and started sending money from the year 2015. The company made foreign currency investments worth Rs 5551.27 crore to three foreign-based entities, including a Xiaomi group entity, under the guise of royalty. In the name of royalty, such a huge amount was sent on the orders of the company’s Chinese group of entities. Crores of rupees to the other two US-based unrelated entities were also for the ultimate benefit of the Xiaomi group entities.
Under the brand name Xiaomi India, MI has captured a large share of mobile phone users in India. Xiaomi India buys completely China-made mobile sets and its other products from manufacturers in India. Xiaomi India has not taken any service from the three foreign-based entities to whom such an amount has been transferred. The company not only sent the amount earned from here illegally under the guise of royalty but also invested crores of rupees here, violating the rest of the FEMA. Surprisingly, the company also gave misleading information to banks while sending money abroad.
