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Xiaomi, one of India's biggest brands in the smartphone segment, has expressed its disappointment over the government order which froze its assets worth around Rs 5,551.27 crores.
We at Jobaaj had reported about the ED seizing funds of Xiaomi India under the allegation that the Indian arm of the Chinese smartphone maker had violated FEMA regulations.
“The Competent Authority appointed under Section 37A of the Foreign Exchange Management Act has confirmed the seizure order of Rs. 5551.27 Crore dated 29.04.2022 passed by the Directorate of Enforcement (ED) against Xiaomi Technology India Private Limited under the provisions of FEMA,” the press release by the ED said.
This is the highest amount frozen till date in India. However, the company has maintained innocence in the matter while claiming that over 84% of the funds frozen by the ED were for royalty payments to Qualcomm. According to the company, it had entered into a license with Qualcomm to license IP for manufacturing smartphones.
“We have studied the order from the Competent Authority and are disappointed with the decision as none of the factual and legal contentions raised by us have been addressed. We believe our royalty payments and statements to the bank are all legitimate and truthful,” the company said.
The company has also stated that the payments were made via RBI-approved and mandated banking channels while calling them 'legitimate commercial arrangements.
“Moreover, we would like to clarify that Xiaomi Technology India does not own or hold any assets outside India. Hence, as per our understanding, Section 4 of FEMA does not even apply in this situation. We will continue to use all means to protect the reputation and interests of the company and our stakeholders. We remain committed to working with various authorities to resolve the issue. ” it added.
Xiaomi is among the largest smartphone sellers in India with a particularly large presence in the Rs 10-15k smartphone segment. Chinese companies have been under constant scrutiny from Indian authorities ever since Galwan border clashes began in 2020. Some examples are the ban of Tiktok under the guise of national security and the tax evasion allegations on Oppo and Vivo.
Article by Aman Agarwal.
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