Xiaomi the popular smartphone manufacturer across the globe seems to be in trouble as the Enforcement Directorate has seized the company’s assets worth Rs 5,551 crore. Yes! You read it correctly, the assets are seized from the Bangalore-based Xiaomi Technology India for “illegal outward remittances”. It seems that the company has beached the norms of Forex.
The ED has already begun the investigation regarding the “illegal outward remittances” by Xiaomi India in February. According to the investigating agency, the company has remitted foreign currency worth Rs 5,551.27 crore.
ED seizes 5,551 crore of Xiaomi India for alleged foreign exchange violation, ED had initiated FEMA investigation over alleged illegal remittances made by Xiaomi India of 5,551 Crore to three foreign based entities which include one Xiaomi group entity in the guise of Royalty.
— Arvind Gunasekar (@arvindgunasekar) April 30, 2022
“Such huge amounts in the name of royalties were remitted on the instructions of the Chinese parent group. The amount remitted to two other US-based unrelated entities was also for the ultimate benefit of the Xiaomi group entities,” the ED stated in a statement.
Furthermore, the agency also claims that the company has shared misleading information with the banks while remitting the funds.
ED has seized Rs.5551.27 Crore of M/s Xiaomi Technology India Private Limited lying in the bank accounts under the provisions of Foreign Exchange Management Act, 1999 in connection with the illegal outward remittances made by the company.
— ED (@dir_ed) April 30, 2022
“We have studied the order from government authorities carefully. We believe our royalty payments and statements to the bank are all legit and truthful. 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. However, we are committed to working closely with government authorities to clarify any misunderstandings,” TOI quoted Xiaomi spokesperson as saying.
Xiaomi is one of the leading smartphone brands in India and the company offers a wide range of products in all segments and categories. Let’s see how the company is going to handle the legal actions and what is going to happen next.