Xiaomi dismisses speculation about moving Indian operations to Pakistan

Xiaomi on Friday denied speculation that the company would be shifting its operations from India to Pakistan. The company was responding to a tweet from a Twitter portal which had claimed that the Chinese smartphone maker would be shifting its operations after its funds were frozen by authorities in India for alleged violation of Foreign Exchange Management Act (FEMA) rules. Earlier this week, the Karnataka High Court had rejected Xiaomi’s appeal for compensation after nearly Rs 5,500 crore worth of the company’s assets were frozen by the Enforcement Directorate in April.

A tweet by South Asia Index on Thursday claimed that the Chinese smartphone maker may move its operations from India to Pakistan after the Indian government froze the company’s assets worth $676 million (roughly Rs 5,500 crore). Xiaomi responded to the tweet on Friday, saying it was “completely false and baseless”.

The company further stated that it joined the government’s Make in India initiative after it entered the Indian market in 2014. It also added that 99 percent of the company’s smartphones and all its TV models were assembled in India.

Xiaomi’s clarification on Twitter came a day after the company’s appeal in the Karnataka High Court seeking lifting of the freeze on $676 million (nearly Rs. 5,500 crore) worth of assets was rejected by the court. The company is being investigated by the ED for allegedly making illegal transfers to foreign entities by passing them off as royalty payments.

The freezing of Xiaomi’s assets was confirmed by the competent authority under FEMA on September 30. The seizure is the highest amount in India confirmed by the authority so far, the ED said.

The company had argued that the asset freeze was “highly disproportionate and has effectively halted the company’s operations,” according to a Reuters report. The company previously maintained that its royalty payments were legitimate and truthful and that it would “continue to use all means to protect its reputation and interests.”