Xiaomi's situation in India seems to worsen each passing day
Xiaomi, which has been facing legal issues with the Indian government for some time now, instead of resolving the situation, seems to be sinking deeper.
Xiaomi's interactions with Indian authorities have been historically tense. A year ago, India's federal financial crime agency froze Xiaomi's assets totaling $676 million, claiming the company was disguising royalty payments as illegal foreign remittances. After a period of relative calm, Xiaomi is once again facing scrutiny. As ANI reported on Friday, quoting officials, the Chinese firm has received a show-cause notice for violating India's Foreign Exchange Management Act (FEMA), with alleged infringements amounting to ₹5,551 crore.
Reports suggest that Xiaomi India, its key officials - CFO Sameer Rao and former MD Manu Jain, along with three banks, namely CITI Bank, HSBC Bank, and Deutsche Bank, have been issued a show-cause notice from India's Adjudicating Authority under FEMA. This notice was prompted by a complaint filed by the Enforcement Directorate (ED) concerning the company's alleged illicit remittances totaling Rs 5551.27 crore.
Xiaomi's situation in India seems to worsen each passing day
According to a statement from the ED, the Competent Authority, appointed under Section 37A of FEMA, has validated the seizure order. The Authority confirmed that ED's position is correct, stating that the Xiaomi India group has illicitly transferred foreign exchange equivalent to Rs 5551.27 crore out of India, contravening Section 4 of FEMA, 1999. This foreign exchange is now held outside India on behalf of the group entity and is subject to seizure under Section 37A of FEMA.
The Authority further underscored that these supposed royalty payments are merely a strategy for exporting foreign exchange out of India, a clear violation of FEMA provisions.
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