- The ED has issued show cause notices to Xiaomi Technology India Pvt Ltd, and three banks under the FE MA for alleged foreign exchange violations of more than ₹5,551 crore.
- Notices have also been sent to 3banks for violation of FEMA by allowing foreign remittances without conducting due diligence and obtaining any underlying Technical Collaboration Agreement.
- The money was in bank accounts belonging to the Chinese smartphone giant and had been seized in connection with alleged ‘illegal outward remittances’ in February.
- Xiaomi said as a brand committed to India, all its operations are “firmly compliant with local laws and regulations.” and said all its payments are legit and truthful.
The Enforcement Directorate said it has issued show cause notices to Xiaomi Technology India Pvt Ltd, its officials, and three banks under the Foreign Exchange Management Act for alleged foreign exchange violations of more than ₹5,551 crores.
The show cause notices have been issued to Manu Kumar Jain, former MD, and Sameer B Rao, director, and chief financial officer. Notices have also been sent to CITI bank, HSBC Bank, and Deutsche Bank AG for violation of FEMA by allowing foreign remittances in the guise of royalty abroad without conducting due diligence and obtaining any underlying Technical Collaboration Agreement from the company, the ED said in a statement.
Last year, the federal probe agency seized ₹5,551.27 crores belonging to the ‘wholly-owned subsidiary of China-based Xiaomi group’ lying under provisions of FEMA. The probe agency said the money was in bank accounts belonging to the Chinese smartphone giant and had been seized in connection with alleged ‘illegal outward remittances’ in February.
“The authority while confirming the seizure held that ED is right in holding that foreign exchange equivalent to ₹5,551.27 crore has been transferred out of India by Xiaomi India in an unauthorized manner and is held outside India on behalf of the group entity in contravention of section 4 of FEMA, 1999 and the same is liable to be seized in terms of provisions of Section 37A of the FEMA,” it said.
Under FEMA, a show cause notice is issued after the completion of the ED investigation and once it is settled, an accused is required to pay a penalty.
Xiaomi issued a statement after the Enforcement Directorate seized ₹5551.27 crores of Xiaomi Technology India Pvt Ltd on charges of violating the Foreign Exchange Management Act. The company said as a brand committed to India, all its operations are “firmly compliant with local laws and regulations.” and said all its payments are legit and truthful.
(With inputs from agencies)
