India seizes $700 million from a leading Chinese company

CNN reported, the Law Enforcement Bureau of India – the country’s main financial investigation agency – accused the smartphone maker’s subsidiary of Xiaomi in India violated foreign exchange laws by making “illegal money transfers”.

According to the agency, Xiaomi India, following the instructions of its parent company, “transferred the equivalent of 55.5 billion rupees ($726 million) in foreign currency to three foreign companies, including one belonging to the company. Xiaomi corporation under the guise of royalties”.

Xiaomi started its operations in India in 2014 and started transferring money a year later. Indian authorities have now seized the equivalent amount “located in the company’s bank account”.

“Xiaomi India purchases mobile kits made entirely in India and other products from Indian manufacturers,” said the Enforcement Bureau. from three overseas-based entities to which such funds were transferred,” the agency added.

The Law Enforcement Bureau of India also accused the company of providing “false information to banks while transferring money abroad”.

Xiaomi India, which distributes Mi-branded smartphones, said in a statement that, “all of our activities are strictly in compliance with local laws and regulations”. Posting on Twitter on April 30, the company said that royalties payments and reports provided to the bank were “all legal and truthful”.

Payments are made for “licensed IP and technologies used in our Indian version products,” the company said.

India gets tough on companies China since border tensions escalated between the world’s two most populous countries two years ago. In 2020, India banned more than 200 apps – many of them Chinese – including the hugely popular video platform TikTok.

Earlier this year, India again banned a number of Chinese apps owned by tech companies like Tencent, Alibaba and NetEase. In response, Beijing said it was “seriously concerned” about the actions India has taken against the Chinese company.