Xiaomi India is in some hot water. The Indian subsidiary of the China-based company had nearly $725 million worth of its assets seized by the Indian Government's Enforcement Directorate over the weekend. The organization has stated that the Indian division of the company has remitted nearly 55.5 billion INR to three foreign-based entities in breach of foreign exchange rules and regulations.
The department mentioned that huge amounts of royalties were remitted that were given to other parties in the form of gits by Xiaomi Technology India Private Limited on the instructions of their Chinese parent company.
It has been done "for the ultimate benefit of the Xiaomi Group" in the breach of Rule 4 of the Foreign Exchange Management Act of 1999. The rule specifies that "no person residing in India shall transfer any foreign exchange to any person situated outside India."
Xiaomi India releases statement:
The Indian subsidiary responded by stating that all royalty payments and statements to the bank are legit and truthful. The royalty payments, mentioned by the state agency were for licensed technologies and intellectual property that were used in the Indian variants of Xiaomi products. It is also "committed to working closely with government authorities to clarify any misunderstandings."
The investigation is still ongoing so the outcome of this situation is yet to be seen.
Source: Reuters
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