ED seizes 5,551.27 crores belonging to Xiaomi India

New Delhi: The Enforcement Department (ED) seized 5,551.27 crores from Xiaomi Technology India Private Limited, the Chinese mobile phone manufacturer, under the provisions of the Foreign Exchange Management Act,1999, on Saturday. The ED's move comes days after the central probe agency questioned the company's vice president for alleged forex violations, The Indian Express reported.

The seized amount of Xiaomi India, a wholly-owned subsidiary of China's Xiaomi group, was from the bank accounts of the company. In February, the probe agency had started an investigation regarding illegal remittances made by the company. Earlier in April, it questioned the company's global vice-president, Manu Kumar Jain, in this regard.

ED released a statement that said that Xiaomi started operations in India in 2014 and started remitting the money since 2015. It had 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, and the remittances were made on the instructions of its Chinese parent group entities, ED said. The amount remitted to other two unrelated entities in the US was also for the benefit of the Xiaomi group, the probe agency added.

ED further said that Xiaomi India is a trader and distributor of mobile phones in India under the brand MI. Xiaomi India procures manufactured mobile sets from manufacturers in India. It had not availed any service from the three foreign-based entities to who it had transferred money, ED said.

ED said that under cover of different unrelated documentary façade created amongst the group entities, Xiaomi India remitted the mentioned amount in the guise of Royalty abroad, violating Section 4 of the FEMA. It also gave misleading information to the banks while sending the money abroad, ED added.