The Enforcement Directorate (ED) on Saturday said it has seized a sum of ₹5,551.27 crore deposited in bank accounts of Xiaomi Technology India Pvt Ltd, the domestic arm of the Chinese smartphone maker.
The seizure was made under the provisions of Foreign Exchange Management Act, 1999 in connection with the alleged illegal outward remittances made by the company, the probe agency says.
The company has remitted foreign currency equivalent to ₹5,551.27 crore to three foreign based entities which include one Xiaomi group entity in the guise of royalty, the probe agency says.
The Enforcement Directorate launched an investigation into the alleged illegal remittances in February this year.
"Under the cover of various unrelated documentary façade created amongst the group entities, the company remitted this amount in guise of royalty abroad which constitute violation of section 4 of the FEMA," ED says. "Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities," it adds.
Xiaomi India has not availed any service from the three foreign based entities to whom such amounts have been transferred, the agency says. "The company also provided misleading information to the banks while remitting the money abroad."
Earlier this month, the agency had summoned Xiaomi’s global vice-president Manu Kumar Jain for alleged contravention of the foreign exchange law.
Jain, the former India head of Xiaomi, was questioned about the India operations of the company and his statement was recorded at ED's Bengaluru zonal office.
Xiaomi India sells smartphones under the 'Mi' brand. These mobile phones are either imported by Xiaomi India or assembled in India by importing parts and components of mobile phones by contract manufacturers of Xiaomi India. The Mi smartphones manufactured by the contract manufacturers are sold exclusively to Xiaomi India, in terms of the contract agreement.
In January, the Directorate of Revenue Intelligence (DRI) stated that Xiaomi Technology India has evaded customs duty to the tune of ₹653 crore between 2017 and 2020 by under-evaluation. The agency conducted raids against the smartphone manufacturer, where it found incriminating evidence in the matter, DRI had said.
Meanwhile, the Enforcement Directorate has also provisionally attached assets amounting to ₹7.27 crore including fixed deposits worth ₹7.12 crore of actor Jacqueline Fernandez under PMLA in the Sukesh Chandrasekhar extortion case.