A statement from ED said, “The company (Xiaomi) has remitted foreign currency equivalent to INR 5551.27 crore to three foreign based entities which include one Xiaomi group entity in the guise of Royalty.”
New Delhi: The Enforcement Directorate (ED) on Saturday seized Rs 5,551.27 crore of Xiaomi Technology India Private Limited under the provisions of the Foreign Exchange Management Act,1999 (FEMA). The move came days after the agency questioned Xiaomi’s global vice-president Manu Kumar Jain for the alleged forex violations by the company.
In a tweet, the agency wrote, “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.”
In a press note, the ED said, “The company started its operations in India in the year 2014 and started remitting the money from the year 2015. The company has remitted foreign currency equivalent to INR 5551.27 crore to three foreign based entities which include one Xiaomi group entity in the guise of Royalty. Such huge amounts in the name of Royalties were remitted on the instructions of their Chinese parent group entities. The amount remitted to other two US based unrelated entities was also for the ultimate benefit of the Xiaomi group entities.”
It added, “Xiaomi India procures completely manufactured mobile sets and other products from the manufacturers in India. The Xiaomi India has not availed any service from the three foreign based entities to whom such amounts have been transferred. Under the cover of various unrelated documentary façade created amongst the group entities, the company remitted this amount in the guise of Royalty abroad which constitutes violation of Section 4 of the FEMA. The company also provided misleading information to the banks while remitting the money abroad.”
The ED further said, under the cover of various unrelated documentary facades created amongst the group entities, the company remitted the amount in the guise of royalty abroad which constitutes a violation of Section 4 of the FEMA.
The Section 4 of FEMA talks about “holding of foreign exchange.” The ED also accused the company of providing “misleading information” to the banks while remitting the money.