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Confirming the confiscation order, the authority said that foreign exchange equivalent to Rs 5,551.27 crore has been transferred out of India in an unauthorised manner by Xiaomi
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The Competent Authority appointed under Section 37A of the Foreign Exchange Management Act (FEMA) on Friday confirmed the confiscation order of Rs 5,551.27 crore passed by the Enforcement Directorate (ED) against Chinese phone maker Xiaomi India.
According to the ED, this is the highest ever amount of seizure order in India which has been confirmed by the authority so far. Confirming the confiscation order, the authority said that foreign exchange equivalent to Rs 5,551.27 crore has been transferred out of India in an unauthorised manner by Xiaomi India and the same can be forfeited as per the provisions of Section 37A of FEMA.
The Competent Authority also observed that payment of royalty is nothing but a tool to move foreign exchange out of India and is in gross violation of the provisions of FEMA.
Earlier, the ED had attached Rs 5,551.27 crore of Xiaomi India lying in bank accounts under the provisions of FEMA. The company has illegally remitted this amount abroad under the guise of royalty, which is in violation of Section 4 of FEMA. "Xiaomi India is a wholly owned subsidiary of China-based Xiaomi Group. We have attached an amount of Rs 5,551.27 crore lying in the company's bank accounts," an ED official said to media.
The company has remitted foreign exchange worth Rs 5,551.27 crore under the guise of royalty to three foreign entities, including a Xiaomi group unit. Such a huge amount was sent on the instructions of the institutions of its Chinese parent group. The amount remitted to two other US-based unrelated entities was also for the ultimate benefit of the Xiaomi group entities. The ED said that the company also provided misleading information to banks while sending money abroad.