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India’s anti-money laundering agency, the Directorate of Enforcement (ED), has seized assets worth ₹5551.27 crore (about $725 million) from Xiaomi India after finding that the company had violated foreign exchange laws.
The company started its operations in India in 2014. The illegal part of its activity is said to have started in 2015. The AML agency claims that Xiaomi India handed over foreign currency to three off-shore entities under cover of royalties , one of which includes a company from the Xiaomi group. The others were based in the United States.
Additionally, the agency said the payments were made “on the instructions of their Chinese parent group entities.”
Xiaomi challenges the decision
Xiaomi India replied through Twittersaying its financial processes comply with Indian laws and regulations.
“We believe our royalty payments and statements to the bank are all legitimate and truthful,” the company said in its response. “These royalty payments that Xiaomi India made were for the licensed technologies and intellectual properties used in our Indian version products. It is a legitimate business agreement for Xiaomi India to make these royalty payments.”
Xiaomi India, however, pledged “to work closely with government authorities to clarify any misunderstandings”.
After experiencing 83% year-on-year growth in the second quarter of 2021, parent company Xiaomi reached 17% market share for smartphones, overtaking Apple, and eventually Samsung, to briefly take the top spot in the global market. smartphones, according to Counterpoint Research.
Source: “ZDNet.com”
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