In accordance with the terms of the Foreign Exchange Management Act of 1999, the Directorate of Enforcement (ED) has taken control of M/s Xiaomi Technology India Private Limited and seized Rs. 5551.27 crores. A fully owned subsidiary of the Chinese-based Xiaomi group is Xiaomi India. The ED has taken possession of this sum of Rs. 5551.27 Crore that was in the company’s bank accounts. In relation to the illicit transfers the firm made in the month of February of this year, ED opened an inquiry.
The business began operating in India in 2014, and starting in 2015, it began sending money back. The Company has transferred foreign cash of INR 5551.27 crore to three overseas corporations, one of which is a Xiaomi group company operating under the cover of royalty. On the direction of their Chinese parent group organisations, such enormous sums were transferred in the name of royalties. The funds sent to the other two unconnected US-based organisations were ultimately for the benefit of the Xiaomi group companies.
Under the brand name MI, Xiaomi India is a dealer and distributor of mobile devices in India. Xiaomi India buys fully assembled mobile phones and other items from Indian manufacturers. The three foreign-based companies to whom these funds have been moved do not provide any services to Xiaomi India. The corporation sent this sum abroad under the pretence of royalties, which is against Section 4 of the FEMA, using a variety of unconnected documentation façades produced by group organisations. While sending the money overseas, the Company also gave banks false information.
