New Delhi: The Enforcement Directorate (ED) on Saturday seized Rs 5,551.27 crore of telecom firm Xiaomi India lying in their bank accounts under the provisions of the Foreign Exchange Management Act, (FEMA) 1999, in connection with the illegal outward remittances made by the company, the probe agency said in a press release.
In February this year, the ED had initiated an investigation over the alleged illegal remittances made by M/s Xiaomi Technology India Private Limited, a wholly-owned subsidiary of the China-based Xiaomi group.
“The company started its operations in India in the year 2014 and started remitting the money from the year 2015. The Company has remitted foreign currency equivalent to INR 5551.27 Crore to three foreign-based entities which include one Xiaomi group entity in the guise of Royalty,” it said.
“Such huge amounts in the name of Royalties were remitted on the instructions of their Chinese parent group entities. The amount remitted to other two US based unrelated entities were also for the ultimate benefit of the Xiaomi group entities,” the ED added.
“The amount remitted to other two US-based unrelated entities were also for the ultimate benefit of the Xiaomi group entities,” the ED said.
It also said while Xiaomi India procures completely manufactured mobile handsets and other products from the manufacturers in India, it has not taken any service from these three foreign-based entities to whom the amounts were transferred.
“Under the cover of various unrelated documentary facade created amongst the group entities, the company remitted this amount in guise of royalty abroad which constitute violation of section 4 of the FEMA,” it said. The said section of the civil law of FEMA talks about “holding of foreign exchange.”
The ED also accused Xiaomi India of furnishing “misleading information” to the banks while remitting the money abroad.
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