Sunday, December 10, 2023

Rs 5,551.27 cr seized by ED from Xiaomi India

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The seizure order issued by the Enforcement Directorate against Xiaomi Technology India Private Limited for Rs 5,551.27 crore was verified on Friday by the authority designated under Section 37A of the Foreign Exchange Management Act (FEMA).

Xiaomi Technology India Private Limited’s bank accounts included Rs 5,551.27 crore, which the ED had taken under the terms of the Foreign Exchange Management Act of 1999. The Authority has stated that there have been more seizure orders in India than ever before.

The Authority, which confirmed the large amount’s seizure, stated that the ED is correct to believe that Xiaomi India improperly transferred foreign exchange worth Rs 5,551.27 crore out of India and that it is now being held outside of India on behalf of the group entity. This violation of Section 4 of the Foreign Exchange Management Act, 1999 makes the foreign exchange subject to seizure under Section 37A of the FEMA.

The Competent Authority further noted that paying royalties is nothing more than a means of moving money outside of India, which is blatantly against FEMA’s rules.

The corporation illegally sent this money abroad under the pretence of royalties, which is against Section 4 of the FEMA.

In opposition to the aforementioned ruling, Xiaomi India also filed a writ case with the High Court of Karnataka, which was dismissed by the Hon’ble High Court in an order dated July 5, 2022. A fully owned subsidiary of the Chinese-based Xiaomi group is Xiaomi India. The ED has seized this sum of Rs. 5551.27 crore that was in the company’s bank accounts.

In conjunction with the unauthorised transfers made by the business in February of this year, the ED opened an investigation.

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.

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