ED’s seizure of Xiaomi India assets worth $725 million reportedly postponed
An Indian court has stayed a federal enforcement agency’s decision to seize $725 million (about Rs 5,570 crore) from local bank accounts of China’s Xiaomi over suspected violations of foreign exchange laws, two sources told Reuters on Friday.
The Enforcement Directorate last week seized the bank accounts of Xiaomi Technology India Private Limited. According to the directorate, funds were transferred illegally to three foreign-based entities, including one Xiaomi group entity, “in the guise of royalty payments”.
Xiaomi denied any wrongdoing and said its “royalty payments and statements to the bank are all legitimate and truthful”. It later filed a complaint against the decision by India’s financial crimes agency in the High Court of the southern state of Karnataka.
On Thursday, a judge suspended the Enforcement Directorate’s decision after hearing Xiaomi’s lawyers, the two sources said, declining to be named because they were not authorized to speak to the media.
Xiaomi and the Enforcement Directorate did not immediately respond to requests for comment. The written court ruling has not yet been made public.
The exemption was granted on the condition that Xiaomi would notify Indian authorities of any money transfers, such as royalty payments, one of the sources said.
According to the Indian court’s website, the case will be heard again on May 12.
According to Counterpoint Research, Xiaomi was India’s largest smartphone vendor in 2021, with a market share of 24 percent.
Reuters previously reported that Xiaomi’s former India director Manu Kumar Jain has been summoned and questioned as part of the directorate’s investigation.
Many Chinese companies have struggled to do business in India due to political tensions following a border clash in 2020. India has since banned more than 300 Chinese apps, including popular ones like TikTok, over security concerns and has imposed stricter standards on Chinese companies investing in India.
© Thomson Reuters 2022
