ED seizes Rs 5,551 Crore from Xiaomi India bank accounts; What did they violate?

New Delhi: The Law Enforcement (ED) Directorate seized Rs 5,551.27 crore belonging to Xiaomi Technology India Pvt Ltd, a China-based wholly owned subsidiary of Xiaomi Group, under the provisions of of 1999 on foreign exchange management.

The money, which was in bank accounts belonging to the Chinese smartphone giant, was seized in connection with alleged “illegal outgoing remittances”.

“Xiaomi India is a 100% subsidiary of the Chinese group Xiaomi. This amount of Rs 5,551.27 crore lying in the bank accounts of the company has been seized by the Enforcement Department,” ED said in a statement.

According to the agency, the company handed over foreign currency equivalent to 5,551.27 crore rupees to three overseas-based entities, including a Xiaomi Group entity, on the basis of royalties, the Hindustan Times reported.

The huge sums were paid in the name of royalties on instructions from Chinese entities in the “parent group”, ED alleged.

The agency said Xiaomi India obtained fully-built mobile sets and other products from Indian manufacturers, but did not receive any services from the overseas-based entities to which these amounts were transferred.

“This is a violation of FEMA Section 4,” ED said.

The smartphone company has also been accused of providing “misleading information” to banks when transferring money overseas.

Shawanda H. Saldana