The Xiaomi business group in India has been reportedly fined USD 75 Million for breaking foreign trade policy and forex violations in India. This is not the first time when Xiaomi has been fined in India. The central probe agency of India has confirmed the following news and the brand has also shared an official response to this.
Xiaomi was fined in India with a whopping USD 725 Million
The central probe agency of India, the Enforcement Directorate (ED), has confirmed that they have seized assets worth around $725 million (INR 5,500 crores) from the Xiaomi business group over a violation of the Indian foreign exchange law. In response to this, the band has shared an official statement on its social media handles saying that its operations “are firmly compliant” with the local laws and regulations.
The Enforcement Directorate of India has also stated that the money was seized from Xiaomi India’s bank account in accordance with the Foreign Exchange Management Act (FEMA), 1999. According to the agency, “Xiaomi India procures completely manufactured mobile sets and other products from Indian manufacturers.” Xiaomi India has not used any of the services provided by the three foreign-based entities to which such funds have been transferred. The company remitted this amount in the guise of royalty abroad under the cover of various unrelated documentary façades created among the group entities, which constitutes a violation of Section 4 of the FEMA. In addition, while remitting money abroad, the Company provided misleading information to banks.”
In response to the following acquisition, the company stated that “these royalty payments made by Xiaomi India were for the in-licensed technologies and IPs used in our Indian version products.” Such royalty payments are a legal commercial arrangement for Xiaomi India. We are, however, committed to working closely with government officials to clear up any misunderstandings.”