In India’s latest dispute with a Chinese business over market activities, the authorities accused Xiaomi Corp. of violating the country’s foreign-exchange regulations and seized 55.51 billion rupees ($726 million) from a local affiliate of the smartphone maker.
According to a statement, India’s anti-money laundering agency took control of Xiaomi Technology India’s bank accounts under the rules of the Foreign Exchange Management Act. According to the Enforcement Directorate, the company’s local unit sent money to three foreign-based businesses with ties to Xiaomi, fraudulently stating it was for royalty payments.
For the first time since the border tensions flared, China’s Foreign Minister, Wang Yi, paid a visit to his deputy, Subrahmanyam Jaishankar, last month in an effort to repair the relationship.
Under the provisions of the Foreign Exchange Management Act, 1999, the ED seized Rs.5551.27 crore from M/s Xiaomi Technology India Private Limited’s bank accounts in connection with the company’s illicit overseas transfers.
Xiaomi contested India’s asset seizure, claiming that its royalty payments were legitimate and that its financial institution disclosures were correct. Xiaomi has been one of the most successful smartphone brands in the rapidly expanding market, growing to become the country’s largest by shipment volume.