In a significant development, the Enforcement Directorate (ED) has seized Rs 5,551.27 crore of Xiaomi India under the provisions of the Foreign Exchange Management Act (FEMA), 1999. The smartphone giant is a fully owned subsidiary of the China-based Xiaomi group.
The ED had started an investigation in connection with the illegal transactions made by Xiaomi India in February this year.
According to ED, the smartphone company started its operations in India in 2014 and started remitting the money from 2015. It has remitted foreign currency equivalent to INR 5551.27 crore to three foreign-based entities and availed no service from the three foreign-based entities to whom such amounts have been transferred.
The company sent funds in the guise of royalty abroad, which constitutes a violation of Section 4 of the FEMA. Xiaomi India also gave misleading information to the banks while sending the money abroad, the investigation agency said.
Earlier this month, the ED summoned Xiaomi’s global vice president Manu Kumar Jain for grilling in the case related to purported violations of the foreign exchange law by the firm.