India Fines Chinese Tech Giant Xiaomi
Updated · May 03, 2022
Chinese company Xiaomi was accused of illegally moving funds out of India.
More Than $700 Million Seized
One of China’s largest technology firms – Xiaomi – has had 55.5 billion rupees, or roughly $726 million, seized by the Indian government. The move follows accusations of fraudulently funneling money out of the country.
Xiaomi, the Mi brand smartphone maker, is accused by the Indian Enforcement Directorate of laundering money from its Indian subsidiary by falsely classifying transactions and issuing false royalties – a violation of foreign exchange laws.
Investigators seized the equivalent amounts it claims the company had remitted to three foreign entities.
Xiaomi India is suspected of paying out the money even though all its procurement, manufacture, and related services are said to be carried out solely in India.
In a statement last week, the Enforcement Directorate said: “Xiaomi India has not availed any service from the three foreign-based entities to whom such amounts have been transferred.”
The company is further accused of giving “misleading information to the banks while remitting the money abroad.”
Xiaomi India vehemently denies the accusations. It announced on Twitter that it has acted legitimately and truthfully, and royalty payments to outside entities “are firmly compliant with local laws and regulations.”
“We are committed to working closely with government authorities to clarify any misunderstandings,” the company said.
The financial seizure is backgrounded by border issues between the two countries that were exacerbated in 2020. Since then, India has banned hundreds of Chinese-made mobile apps, including TikTok, as well as the wholesale ecommerce platform Alibaba.
The country’s anti-money laundering agency now has control over Xiaomi India’s bank accounts under the Foreign Exchange Management Act.
In April, Indian Foreign Minster Subrahmanyam Jaishankar welcomed his Chinese counterpart Wang Yi to discuss tensions. After the meeting, Jaishankar described the “current situation as a work in progress,” though this latest incident will only set things back further.
A qualified journalist and longtime web content writer, Keelan has a passion for exploring information and learning new things. If he's not writing or pushing his own brands, you'll find him watching pro wrestling or trying not to rant about politics online.
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