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Funds value over Rs 5,551 crore of Chinese language cell manufacturing firm Xiaomi India have been “seized” for violating the Indian international alternate legislation, the Enforcement Directorate mentioned mentioned on Saturday.
The motion has been taken towards Xiaomi Expertise India Non-public Restricted. The corporate (additionally referred to as Xiaomi India) is a dealer and distributor of cell phones within the nation underneath the model identify of Mi.
“Xiaomi India is wholly owned subsidiary of China-based Xiaomi group. This quantity of Rs. 5,551.27 crore mendacity within the financial institution accounts of the corporate has been seized by the Enforcement Directorate,” the company mentioned in an announcement.
ED has seized Rs.5551.27 Crore of M/s Xiaomi Expertise India Non-public Restricted mendacity within the financial institution accounts underneath the provisions of International Change Administration Act, 1999 in reference to the unlawful outward remittances made by the corporate.
— ED (@dir_ed) April 30, 2022
The seizure of funds has been finished underneath related sections of the International Change Administration Act (FEMA) after a probe was launched by the federal company towards the corporate in reference to alleged “unlawful remittances” despatched overseas by the Chinese language agency in February.
Xiaomi began its operations in India in 2014 and began remitting the cash from the following 12 months, it mentioned. “The corporate has remitted international forex equal to Rs. 5,551.27 crore to 3 international based mostly entities which embody one Xiaomi group entity, within the guise of royalty,” the ED mentioned.
Such enormous quantities within the identify of royalties had been remitted on the directions of their Chinese language “guardian group” entities, it alleged. “The quantity remitted to different two US-based unrelated entities had been additionally for the final word advantage of the Xiaomi group entities,” the ED mentioned.
It mentioned whereas Xiaomi India procures utterly manufactured cell units and different merchandise from the producers in India it has not availed any service from these three international based mostly entities to whom such quantities have been transferred. “Beneath the duvet of varied unrelated documentary facade created amongst the group entities, the corporate remitted this quantity in guise of royalty overseas which represent violation of part 4 of the FEMA,” it mentioned.
The mentioned part of the civil legislation of FEMA talks about “holding of international alternate.” The ED additionally accused the corporate of offering “deceptive info” to the banks whereas remitting the cash overseas.
Earlier this month, the ED had additionally questioned the worldwide vice chairman of the group, Manu Kumar Jain, on the company’s regional workplace in Bengaluru, Karnataka.
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