27 April 2022
The Indian Enforcement Directorate (ED) has seized Xiaomi's assets worth $725 million (about INR 55.5 billion). The Indian division of the Chinese tech giant has been accused of violating local foreign exchange laws. It is said to have sent "illegal remittances" to three overseas entities under the disguise of royalty payments.
ED is reported to have been keeping an eye on Xiaomi India for quite some time. It finally decided to seize all the financial assets of the company this past weekend. It said that remittances were sent to two unidentified and unrelated American entities along with one entity related to the Xiaomi group. It added, “Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities".
Manu Kumar Jain, former head of Xiaomi India, was summoned by ED earlier this year where he was questioned regarding the company structure and tax-related compliances. It should be noted that Jain currently serves as the Global Vice President of Xiaomi.
In its official response, Xiaomi India has issued a public statement mentioning that "all our operations are firmly compliant with local laws and regulations". It adds that the royalty payments were legit and were made for the in-licensed technologies and IPs used in Indian versions of its products.