India seizes $ 725 million in Xiaomi assets due to illegal money transfers

Employees stand near the company logo in a Xiaomi store in Shanghai, China on November 1, 2021. REUTERS / Aly Song / Files

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NEW DELHI, April 30 (Reuters) – India said on Saturday that it had seized $ 725 million from the local bank accounts of China’s Xiaomi Corp (1810.HK) after an investigation found that the smartphone maker had made illegal money transfers to foreign entities by giving them further. as royalty payments.

The Enforcement Agency had investigated the Chinese company’s business practices over suspected breaches of Indian currency laws. read more

“The Anti-Financial Crime Agency said on Saturday that it had seized the bank account’s assets from Xiaomi Technology India Private Limited after finding that the company had transferred the currency equivalent of Rs 55.5 billion to three foreign-based entities, including an entity in the Xiaomi group.” in cover of royalty “payments.

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The transfer to two other unidentified and unrelated U.S.-based devices was also for “the ultimate benefit to the Xiaomi Group’s devices,” the agency added in a statement.

“Such huge sums in the name of royalties were transferred following instructions from their Chinese superior group units,” the directorate said.

Xiaomi said in a statement issued later on Saturday that it complied with Indian laws and believed that “royalty payments and statements to the bank are legitimate and truthful”.

“These royalty payments paid by Xiaomi India were for the unlicensed technologies and IPs used in our Indian version products … we are committed to working closely with government authorities to resolve any misunderstandings,” he added.

The directorate’s actions against Xiaomi signal an expanded investigation of the Chinese smartphone maker, whose India office was attacked in December in a separate investigation into alleged tax evasion. Some other Chinese smartphone markers were also raided at the time.

Reuters reported on April 12 that Xiaomi’s former India chief, Manu Kumar Jain, had been summoned for questioning as part of the directorate’s investigation. read more

Jain, now the global vice president of Xiaomi based in Dubai, appeared before investigators earlier this month, said a source with direct knowledge of the probe, and asked not to be named because of the sensitivity of the case.

The Norwegian Enforcement Agency also asked the company for details on foreign financing, ownership interest and financing patterns, accounts and information on key managers who run the business.

Xiaomi was India’s leading smartphone seller in 2021, with a market share of 24%, according to Counterpoint Research. South Korea’s Samsung was the No. 2 brand with a share of 19%.

Many Chinese companies have struggled to do business in India due to political tensions following a border clash in 2020. India has cited security concerns by banning more than 300 Chinese apps since then, including popular ones like TikTok, and also tightening Chinese standards companies investing in India.

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Reporting by Aditya Kalra in New Delhi; Edited by William Mallard, Helen Popper and Mike Harrison

Our standards: Thomson Reuters Trust Principles.

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