India seizes $725 million of Xiaomi assets over illegal payments
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India seizes $725 million of Xiaomi assets over illegal payments
Xiaomi India had $725 million from its bank accounts seized by the Enforcement Directorate over the weekend. The state organization said the Indian division of the Chinese manufacturer remitted the equivalent of INR55.5 billion to three foreign-based entities in breach of foreign exchange laws.
Manu Kumar Jain, Xiaomi Global VP
The directorate stated the huge amounts of royalties were remitted (gifted to other parties) by Xiaomi Technology India Private Limited on the instructions of their Chinese parent company. It was done “for the ultimate benefit of the Xiaomi group” in breach of Rule 4 of the Foreign Exchange Management Act of 1999. It states “no person resident in India shall […] transfer any foreign exchange […] situated outside India.”
Xiaomi India posted a response, stating all royalty payments and statements to the bank are legit and truthful. The royalty payments, mentioned by the state agency were for in-licensed technologies and intellectual property used in the Indian version of Xiaomi products. It is also “commited to working closely with government authorities to clarify any misunderstandings.”
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