Insight Bureau: The Directorate of Enforcement (ED), in one of its biggest operations, seized Rs 5,551.27 crore from Xiaomi Technology India. The seizure was made after months-long investigations by ED.
Chinese telecom firm Xiaomi, which is one of the top mobile phone brands in the country, has an annual turnover of Rs 34,000 crore. The money has been seized from four bank accounts of Xiaomi under the provisions of Foreign Exchange Management Act, 1999.
According to ED sources, the company had already sent a major portion of the money to its group companies in China. “The balance amount was lying in its four bank accounts at HSBC, Citi Bank, IDBI and Deutsche Bank,” the official source said.The royalty amount has been remitted based on the instruction of its Chinese parent group. A certain amount has also been remitted to two more unrelated US-based entities, the source added.
The company has been operating in India since 2014 and as per the agreement, it procures the completely manufactured handsets from manufacturers in India. These contract manufacturers have a direct arrangement with the group entities of Xiaomi based in China for supplying raw material and manufacturing of mobile sets as per the specifications provided by Xiaomi China, ED stated.
“Xiaomi India has not provided any technological input or software-related assistance to these contract manufacturers. Interestingly, Xiaomi India has transferred money to the three foreign-based entities from which they have not availed any kind of service,” ED authorities said.
The Company, without having any authorization, remitted the money, violating Section 4 of FEMA. The company allegedly also provided misleading information to the banks while remitting the money abroad.