Xiaomi’s 5,551 Crores Seizure, India’s Biggest, Okayed By Forex Authority
New Delhi:
India’s foreign exchange regulator has confirmed the seizure of Rs 5,551 by Chinese phone maker Xiaomi for allegedly sending money abroad illegally, the country’s top anti-money laundering agency says. in a statement today.
The Directorate General of Enforcement, or ED, seized Rs 5,551 crore of Xiaomi Technology India Pvt Ltd in April, biggest money seizure in the country so far.
The investigative agency said in a statement today, the agency under the Foreign Exchange Management Act, or FEMA, has confirmed that the ED was right in seizing Xiaomi’s funds, which the Chinese company is accused of had illegally moved out of India, the investigative agency said in a statement today.
FEMA is India’s rule book that guides all foreign exchange transactions.
The ED said the foreign exchange regulator had agreed that the way Xiaomi India organized funds outside the country on behalf of the group’s organization violated FEMA and this resulted in the funds being seized.
In April, the ED said Xiaomi India had sent money abroad “in the form of royalties”, which violated FEMA.
The ED said in today’s statement: “The competent authority also found that the payment of royalties was merely a tool to move foreign exchange out of India.
Xiaomi India is a wholly owned subsidiary of Xiaomi corporation based in China. It started operating in India in 2014 and started sending money abroad a year later.
The ED said: “Such a huge amount in the name of royalties was transferred according to the instructions of the institutions of their Chinese parent group. today.
According to the ED, Xiaomi India did not use any services from the three foreign legal entities, and the phone maker also gave false information to banks when sending money abroad.
Xiaomi India has applied to Karnataka High Court for the confiscation of funds. The court dismissed the application in July.
In May, Chinese state media reported that India should stop “regulatory attacks” against Chinese companies after Xiaomi Corp allegedly threatened “physical violence”. Xiaomi has told the Karnataka High Court that its top executives have faced threats and coercion during the Enforcement Bureau’s questioning in the illegal money transfer case. The Executive Directorate called the allegations “untrue and baseless”.