Home Tech ED seizes Rs 5,551 crore from Xiaomi’s financial institution accounts over Forex violations

ED seizes Rs 5,551 crore from Xiaomi’s financial institution accounts over Forex violations

0

Funds value over Rs 5,551 crore of Chinese cellular manufacturing firm Xiaomi India have been “seized” for violating the Indian overseas trade legislation, the Enforcement Directorate mentioned mentioned on Saturday.

The motion has been taken in opposition to Xiaomi Technology India Private Limited. The firm (additionally known as Xiaomi India) is a dealer and distributor of cellphones within the nation underneath the model title of MI.

“Xiaomi India is wholly owned subsidiary of China-based Xiaomi group. This amount of Rs 5,551.27 crore lying in the bank accounts of the company has been seized by the Enforcement Directorate,” the company mentioned in a press release.

The seizure of funds has been accomplished underneath related sections of the Foreign Exchange Management Act (FEMA) after a probe was launched by the federal company in opposition to the corporate in reference to alleged “illegal remittances” despatched overseas by the Chinese agency in February.

Xiaomi began its operations in India in 2014 and began remitting the cash from the following 12 months, it mentioned.

“The company has remitted foreign currency equivalent to Rs 5,551.27 crore to three foreign based entities which include one Xiaomi group entity, in the guise of royalty,” the ED mentioned.

Such big quantities within the title of royalties have been remitted on the directions of their Chinese “parent group” entities, it alleged.

“The amount remitted to other two US-based unrelated entities were also for the ultimate benefit of the Xiaomi group entities,” the ED mentioned.

It mentioned whereas Xiaomi India procures utterly manufactured cellular units and different merchandise from the producers in India it has not availed any service from these three overseas based mostly entities to whom such quantities have been 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 mentioned.

The mentioned part of the civil legislation of FEMA talks about “holding of foreign exchange.” The ED additionally accused the corporate of offering “misleading information” 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.

Source: www.financialexpress.com”