ED seizes Xiaomi's Rs 5,551-cr assets over forex violations

New Delhi, April 30

The Enforcement Directorate (ED) today said it has seized Rs 5,551.27 crore assets of Chinese mobile manufacturing company Xiaomi India under the provisions of Foreign Exchange Management Act (FEMA).

Under scanner

• Xiaomi launched its operations in India in 2014 and started remitting money the next year
• Earlier in April, the ED had also questioned the global vice-president of the group, Manu Kumar Jain, at the agency’s regional office in Bengaluru, Karnataka

In an official statement, the ED said the action had been taken against Xiaomi Technology India Private Limited, also known as Xiaomi India, which is a trader and distributor of mobile phones in the country under the brand name of Mi.

“Xiaomi India is a wholly owned subsidiary of China-based Xiaomi group. The amount of Rs 5,551.27 crore lying in the bank accounts of the company has been seized,” the agency said.

It further said the funds had been seized under relevant Sections of FEMA after a probe was launched by the ED against the company in connection with alleged “illegal remittances” sent abroad by the Chinese firm in February.

“The company has remitted foreign currency worth Rs 5,551.27 crore to three foreign-based entities, which include one Xiaomi group entity, in the guise of royalty,” the ED said in the statement.

“The amounts remitted to other two US-based unrelated entities were also for the ultimate benefit of the Xiaomi group entities,” the ED said.

It said while Xiaomi India procures completely manufactured mobile sets and other products from manufacturers in India, it has not availed any service from the three foreign-based entities, but sum had been transferred to them.

The ED also accused the company of providing “misleading information” to banks while remitting the money abroad.