ED seizes Rs 5,551 cr deposits of Xiaomi India for FEMA violation

Funds worth over Rs 5551 crore of Chinese mobile manufacturing company Xiaomi India have been seized for violating the Indian foreign exchange law the Enforcement Directorate said said on SaturdayThe action has been taken against Xiaomi Technology India Private Limited The company also called Xiaomi India is a trader and distributor of mobile phones in the country under the brand name of MIXiaomi India is wholly owned subsidiary of Chinabased Xiaomi group This amount of Rs 555127 crore lying in the bank accounts of the company has been seized by the Enforcement Directorate the agency said in a statementThe seizure of funds has been done under relevant sections of the Foreign Exchange Management Act FEMA after a probe was launched by the federal agency against the company in connection with alleged illegal remittances sent abroad by the Chinese firm in FebruaryXiaomi started its operations in India in 2014 and started remitting the money from the next year it saidThe company has remitted foreign currency equivalent to Rs 555127 crore to three foreign based entities which include one Xiaomi group entity in the guise of royalty the ED saidSuch huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities it allegedThe amount remitted to other two USbased unrelated entities were also for the ultimate benefit of the Xiaomi group entities the ED saidIt said while Xiaomi India procures completely manufactured mobile sets and other products from the manufacturers in India it has not availed any service from these three foreign based entities to whom such amounts have been transferredUnder 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 saidThe said section of the civil law of FEMA talks about holding of foreign exchangeThe ED also accused the company of providing misleading information to the banks while remitting the money abroadEarlier this month the ED had also questioned the global vice president of the group Manu Kumar Jain at the agencys regional office in Bengaluru KarnatakaThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever