The Enforcement Directorate (ED) has seized Rs 5,551.27 crore from smartphone giant Xiaomi India under the provisions of the Foreign Exchange Management Act (FEMA), 1999. Xiaomi India is a wholly owned subsidiary of the China-based Xiaomi Group
The ED had started a probe into illegal remittances made through business establishments in February this year.
According to the Enforcement Directorate, Xiaomi started its operations in India in 2014 and started sending cash from 2015.
“The business venture remitted foreign exchange amounting to Rs 5,551.27 crore to three foreign-based entities comprising a Xiaomi group entity under the guise of royalty. Such huge amounts were remitted in accordance with the guidelines of their Chinese parent group entities in identifying royalties,” the ED alleged in a statement.
The amount remitted to two other unrelated entities in the US was also for the ultimate benefit of the Xiaomi team companies, the officials added.
Xiaomi India is a dealer and distributor of cell phones in India under the company title of MI. Xiaomi India procures completely manufactured cell sets and various products from manufacturers in India.
The ED also alleged that Xiaomi India did not avail any suppliers from the three foreign-based companies to whom the amount was transferred.
“Under the cowl of several disjointed documentary facades created within the Crew entity, the company has remitted this amount abroad in the guise of royalty which is in violation of FEMA. The corporation provided misleading records to banks while remitting excess money abroad,” the ED statement added.
