Enforcement Director seized Rs 5551.27 crore from Chinese mobile company Xiaomi for allegedly violating Foreign Exchange Laws (FEMA.i.e. Foreign Exchange Management Act). Investigators said that money was confiscated from Xiaomi technology India’s bank account. Earlier in January, the Central Government had sent a notice to the Xiaomi alleging evasion of import duty of Rs. 653 crore.
Evidence collected by the Directorate of Revenue Intelligence indicates that Xiaomi India or its manufacturers are not adding royalties to the value of imported goods. This is against the law on imports. The investigation also found that royalties and license fees paid to U.S company Qualcomm and China’s Xiaomi mobile software did not add to the importation of goods by Xiaomi or their contracted manufacturers. In this way, the mobile company has made a lot of profit by evading the import duty. In particular, it has come to light that the branded phones of Xiaomi are manufactured by a company sold only to Xiaomi India.
According to the Enforcement Directorate, Xiaomi India started sending remittances abroad in the year following the commencement of business in this country in 2014. They have sent Rs.5551.27 crore to three foreign companies under the guise of royalty. One of which is the Xiaomi Group. It is alleged that this was done under the direction of the parent company. The Chinese company has even benefitted from the money sent to America. Sending money in this way is against FEMA law.
A spokesman for Xiaomi said that the Indian government guidelines, royalty documents, and trade agreement with India would be scrutinized and only by talking to the government about it they will be able to dispel the confusion.