ED Attaches Rs. 5,551 Crore Worth of Deposits of Xiaomi India Under FEMA
The competent authority under the Foreign Exchange Management Act (FEMA) has approved an order to seize over Rs 5,551 crore worth of deposits of Chinese mobile phone maker Xiaomi, the highest amount frozen in India so far, the Ministry of External Affairs said on Friday.
The Enforcement Directorate (ED) had issued the seizure warrant under FEMA on April 29 and later submitted it to the competent authority for approval as required under the law regulating foreign exchange violations in the country.
The order has been issued under Section 37A of the FEMA against Xiaomi Technology India Private, the federal agency said in a statement.
The competent authority constituted under FEMA has confirmed the attachment order of Rs. 5551.27 Crore dated 29.04.2022 issued by the ED against Xiaomi Technology India Private Limited under the provisions of FEMA.
— ED (@dir_ed) September 30, 2022
“This is the highest amount of seizure warrants in India confirmed by the authorities so far.”
“The authority confirmed the seizure of Rs. 5,551.27 crore and held that ED is right in holding that an amount of foreign currency worth Rs. 5,551.27 crore was improperly transferred out of India by Xiaomi India and is being retained outside India on behalf of the group entity, in violation of Section 4 of FEMA,” the agency said.
The competent authority also observed that the payment of royalty is nothing but a tool to siphon off foreign exchange from India and is a “clear violation” of the provisions of FEMA, it said.
Xiaomi is a marketer and distributor of mobile phones in the country under the brand name MI and Xiaomi India is a wholly owned subsidiary of the China-based Xiaomi Group.
Earlier in August, it was reported that Xiaomi had received three showcase notices, with an estimated import duty liability of around Rs 653 crore, of which the company had deposited only Rs 46 lakh, Finance Minister Nirmala Sitharaman told Parliament.
In late April, the ED seized Rs 5,551.27 crore from Xiaomi Technology India, a wholly owned subsidiary of the China-based Xiaomi group, under the Foreign Exchange Management Act (FEMA) in connection with illegal transfers made by the company in February this year.
