Funds value over Rs 5,551 crore of Chinese language cell manufacturing firm Xiaomi India have been “seized” for violating the Indian overseas trade regulation, the Enforcement Directorate stated on Saturday. The motion has been taken in opposition to Xiaomi Expertise India Personal Restricted. The corporate (additionally referred to as Xiaomi India) is a dealer and distributor of cellphones within the nation beneath the model title MI.
“Xiaomi India is an entirely owned subsidiary of China-based Xiaomi group. This quantity of Rs 5,551.27 crore mendacity within the financial institution accounts of the corporate has been seized by the Enforcement Directorate,” the company stated in a press release. The seizure of funds has been achieved beneath related sections of the Overseas Alternate Administration Act (FEMA) after a probe was launched by the federal company in opposition to the corporate in reference to alleged “unlawful remittances” despatched overseas by the Chinese language agency in February.
Xiaomi began its operations in India in 2014 and began remitting the cash from the subsequent yr, it stated. “The corporate has remitted overseas forex equal to Rs 5,551.27 crore to a few overseas primarily based entities which embody one Xiaomi group entity, within the guise of royalty,” the ED stated. Such large quantities within the title of royalties had been remitted on the directions of their Chinese language “mum or dad group” entities, it alleged. “The quantity remitted to different two US-based unrelated entities had been additionally for the last word good thing about the Xiaomi group entities,” the ED stated.
It stated whereas Xiaomi India procures fully manufactured cell units and different merchandise from the producers in India, it has not availed any service from these three overseas primarily based entities to whom such quantities have been transferred. “Underneath the quilt of varied unrelated documentary facade created amongst the group entities, the corporate remitted this quantity in guise of royalty overseas which represent violation of part four of the FEMA,” it stated. The stated part of the civil regulation of FEMA talks about “holding of overseas trade.” The ED additionally accused the corporate of offering “deceptive data” to the banks whereas remitting the cash overseas.
Earlier this month, the ED had additionally questioned the worldwide vp of the group, Manu Kumar Jain, on the company’s regional workplace in Bengaluru, Karnataka.