Under the terms of the Foreign Exchange Management Act (FEMA), the Enforcement Directorate has seized Rs. 5,551.27 crores from Xiaomi Technology India Private Limited in connection with alleged illicit transfers made by the business. Xiaomi India is a wholly-owned subsidiary of the Xiaomi Group, based in China. “This money was in the company’s bank accounts,” a company official explained.
According to the Enforcement Directorate, the company began operating in India in 2014 and began remitting funds the following year. Under the pretense of royalties, it paid foreign currency equivalent to 5,551.27 crores to three foreign-based businesses, one of which is a Xiaomi group entity.
“On the orders of their Chinese parent group companies, such large sums in the name of royalties were remitted.” The money sent to the other two unrelated businesses in the United States was also for the Xiaomi group’s benefit, according to the agency.
Under the brand name MI, Xiaomi India is a trader and distributor of mobile phones in India. According to the ED, it purchases fully assembled mobile phones and other products from Indian manufacturers and has not received any services from the three foreign-based firms to whom the funds were sent.
The agency claimed that the corporation moved the funds offshore in violation of the FEMA under the guise of numerous unrelated documents facades developed among the group entities. “While remitting money abroad, the business also provided incorrect information to the banks,” it claimed. The FEMA investigation was started by the Enforcement Directorate in February.