Sunday, December 10, 2023

ED seizes Xiaomi India’s funds worth Rs 5,551 cr under FEMA

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The Enforcement Directorate (ED) on Saturday informed that it has seized funds worth around Rs 5,551 cr of Xiaomi Technology India Pvt Ltd, a wholly-owned subsidiary of China-based Xiaomi group, under the Foreign Exchange Management Act (FEMA). The agency says the seizure has been made in connection with illegal remittances made by the firm in February this year.

As per the agency, the firm started remitting the money in 2015 and has remitted an amount equivalent to Rs 5,551.27 cr till date in the guise of royalty to three foreign-based entities which include one Xiaomi group.

The ED stated, “Such huge amounts in the name of Royalties were remitted on the instructions of their Chinese parent group entities. The amount remitted to other two US-based unrelated entities were also for the ultimate benefit of the Xiaomi group entities.”

The central agency added, “Xiaomi India has not availed any service from the three foreign-based entities to whom such amounts have been transferred. Under the cover of various unrelated documentary facade created amongst the group entities, the company remitted this amount in the guise of royalty abroad which constitutes a violation of Section 4 of the FEMA.”

Xiaomi India also provided misleading information to the banks while remitting the money abroad, added the ED.

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