New Delhi [India], September 30 (ANI): The authority appointed under Section 37A of the Foreign Exchange Management Act (FEMA) on Friday confirmed the seizure order of Rs 5,551.27 crore by Enforcement Directorate against Xiaomi Technology India Private Limited.
Earlier, ED had seized Rs 5,551.27 crore of Xiaomi Technology India Private Limited lying in its bank accounts under the provisions of the Foreign Exchange Management Act,1999.
This is the highest amount of seizure orders in India which has been confirmed by the Authority to date.
The Authority while confirming the seizure of the hefty amount held that ED is right in holding foreign exchange equivalent to Rs 5,551.27 crore has been transferred out of India by Xiaomi India in an unauthorised manner and is held outside India on behalf of the group entity is in contravention of Section 4 of the Foreign Exchange Management Act, 1999 and the same is liable to be seized in terms of provisions of Section 37A of the FEMA.
The Competent Authority also observed that payment of royalty is nothing but a tool for transferring foreign exchange out of India and the same is in blatant violation of provisions of FEMA.
The company unauthorisedly remitted this amount in the guise of Royalty abroad which constitutes a violation of Section 4 of the FEMA.
Xiaomi India also filed a writ petition before the High Court of Karnataka against the said order which was dismissed by the Hon'ble High Court vide order dated July 5, 2022. Xiaomi India is a wholly-owned subsidiary of the China-based Xiaomi group. This amount of Rs.5551.27 Crore lying in the bank accounts of the company has been seized by the ED.
The ED initiated investigation in connection with the illegal remittances made by the company in the month of February this year.
The Company started its operations in India in the year 2014 and started remitting the money from the year 2015. The Company has 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.
Such huge amounts in the name of Royalties were remitted on the instructions of their Chinese parent group entities. The amount remitted to the other two US-based unrelated entities was also for the ultimate benefit of the Xiaomi group entities.
Xiaomi India is a trader and distributor of mobile phones in India under the brand name of MI. (ANI)