ED seizes ₹5,551 crore from Xiaomi India for illegal remittances
Premium- Additionally the probe agency has also issued a summon notice to the company under the FEMA Act, a notification by the ED showed.
MUMBAI : The Enforcement Directorate on Saturday seized ₹5,551 crores from bank account of Xiaomi Technology Pvt Ltd under the provisions of Foreign Exchange Management Act 1999.
The probe agency in a release said that it seized the said amount from Xiaomi in connection with illegal outward remittances made by the company.
Additionally the probe agency has also issued a summon notice to the company under the FEMA Act, a notification by the ED showed.
Xiaomi India is wholly-owned subsidiary of China based Xiaomi group.
“This amount of Rs. 5551.27 crore lying in the bank accounts of the company has been seized by the ED. ED had initiated investigation in connection with the illegal remittances made by the company in the month of February this year", ED said in its release.
The company began operations in India in 2014 and began remitting funds in 2015.
The company has sent foreign currency of ₹5551.27 crore to three foreign-based organisations, one of which being a Xiaomi group company operating under the name Royalty.
On the orders of their Chinese parent group organisations, such large sums in the name of royalties were remitted. The money sent to two unrelated businesses in the United States was also intended for the Xiaomi group’s benefit.
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Essentially, Xiaomi India, that uses the brand name MI, is a trader and distributor of mobile phones in India. Xiaomi India purchases fully assembled mobile handsets and other products from Indian manufacturers.
ED found that the three foreign-based organisations to whom such funds were routed did not provide any service to Xiaomi India.
The mobile giant transmitted this cash in the pretext of royalty abroad under the cover of several unrelated documentary facades formed among the group organisations, which is a breach of Section 4 of the FEMA. While remitting money abroad, the company also presented banks with false and misleading information, ED said.