As part of an inquiry that found unlawful remittances made by the Chinese smartphone manufacturer to overseas organisations, India’s crime-fighting agency, the Enforcement Directorate, has issued a show-cause notice to Xiaomi’s India unit, its officials, and three banks.
The Foreign Exchange Management Act (FEMA) was used to issue the notice, which relates to remittances totaling $673.2 million or 55.51 billion Indian rupees.
According to the Enforcement Directorate, Xiaomi started sending money abroad illegally in 2015 by using false information and passing off the transfers as royalties.
According to the CBI, Xiaomi conducted illicit remittances by misrepresenting them as royalty payments to overseas organizations. As a result, Xiaomi’s assets in India were frozen last year.
Xiaomi disputes claims
Under the guise of royalty payments, Xiaomi is accused of transferring 55.51 billion rupees to three companies, one of which is a Xiaomi group firm.
Xiaomi, who defended the legitimacy of its royalty payments and reaffirmed its commitment to upholding its reputation and interests, refuted these claims.
violation of Section 4
The organisation claims that Xiaomi’s actions are in violation of Section 4 of the Foreign Exchange Management Act, which places limitations on the purchase, ownership, possession, or transfer of foreign currency, foreign securities, or real estate that is situated outside of India.
An Indian court denied the Chinese smartphone manufacturer’s appeal against the seizure in the month of April, which was a major setback for the business.