India’s anti-money laundering agency seized $726 million from a local unit of Chinese mobile company Xiaomi Corp. for disobeying the foreign exchange laws of the country. The Enforcement Directorate tweeted that the money was clutched from the bank accounts of Xiaomi technology India under the contingencies of the Foreign Exchange Management Act. Xiaomi didn’t instantaneously respond to a request for comment.
Xiaomi accounts for more than a fifth of India’s smartphone market share by shipment volumes, making it the most voluminous. Chinese telecom entity Xiaomi, reacting to the Enforcement Directorate crackdown and seizure of Rs 5,551.27 crore assets in India, said it has decided to work closely with the government officials to elucidate any disputations.
A spokesperson from Xiaomi stated, “As a brand committed to India, all our operations are firmly compliant with local laws and regulations. We have reviewed the order from government officials attentively. We trust our royalty payments and statements to the bank are all bona fide and genuine. 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.”
As per the Enforcement Directorate, the company has suspended foreign currency equivalent to Rs 5,551.27 crore to three foreign-related companies which include one Xiaomi group firm in the form of Royalty. The ED said, “Such massive amounts in the name of Royalties were suspended on the guidelines of their Chinese parent group companies. The amount remitted to other two US-based unrelated companies was also for the ultimate benefit of the Xiaomi group companies.”