Oppo, Vivo India, Xiaomi under government scanner in India

It’s a great time for Chinese mobile manufacturers operating in India.

The Indian government is investigating cases of alleged tax evasion by three major Chinese mobile companies — Oppo, Vivo India and Xiaomi — and notices have been issued to them respectively. The cases filed against the companies range from allegations of what the government calls income tax evasion and customs violations to fraud and money laundering.

Finance Minister Nirmala Sitharaman on Tuesday informed the Upper House of Parliament that the Department of Revenue Intelligence (DRI) has issued a notice to Oppo for a total customs duty of Rs. 4,389 crore on the grounds of misdeclaration of certain goods, leading to underpayment of duty. The evasion of duty, Sitharaman said, is around Rs. 2,981 crore.

In addition, the Home Ministry is said to have conducted raids at over 40 locations, including in Uttar Pradesh, Madhya Pradesh and some southern states, in connection with a money laundering case filed against Chinese smartphone maker Vivo.

Earlier in July, the ED had reportedly frozen nearly 119 bank accounts linked to Vivo’s India, worth several hundred crores, as part of a probe into alleged money laundering that the enforcement agency had termed a “heinous economic offence”. In response, the mobile company approached the Delhi High Court seeking permission to operate its bank account, following which the court allowed the company to operate the bank accounts on the condition that a bank guarantee of Rs. 950 crores was furnished.

Breaking news is that the Directorate of Revenue Intelligence (DRI) on Wednesday again reported that it has detected around Rs 2,217 crore worth of customs duty evasion by Vivo Mobile India.

As for Xiaomi, three showcase announcements have been issued and the estimated import duty is around Rs 653 crore, of which the company has deposited only Rs 46 lakh, Sitharaman said on Tuesday.

In late April, the ED had reportedly seized Rs 5,551.27 crore from Xiaomi Technology India Pvt Ltd, a wholly-owned subsidiary of the China-based Xiaomi Group, under the Foreign Exchange Management Act (FEMA) in connection with illegal fund transfers made by the company in February this year.

The seized amount of Rs 5,551.27 crore, they said, was in the bank accounts of Xiaomi Technology India Pvt Ltd, which started its operations in India in 2014 and started transferring money in 2015.

Following the ED’s crackdown, Chinese telecom company Xiaomi said it would work closely with government agencies to clarify what it called “misunderstandings”.

“As a brand committed to India, all our activities strictly comply with local laws and regulations. We have carefully studied the order from government authorities,” a Xiaomi spokesperson said at the time, adding that it believed the company’s royalty payments and bank statements were all “legitimate and truthful”.

Moreover, in mid-April this year, the Ministry of External Affairs is said to have summoned Manu Kumar Jain, a former head of Xiaomi’s Indian unit, in the case.

But it doesn’t stop there.

Minister Sitharaman also said on Tuesday that the ED is looking into 18 companies set up by Vivo, where they voluntarily transferred Rs 62,000 crore as deposits.

In response to the repeated accusations against Chinese companies for serious economic crimes, Beijing said it was closely monitoring the developments and stressed that the Chinese government has always required companies to comply with laws and regulations when doing business abroad.

China also expressed hope that Indian authorities will abide by the laws when carrying out investigation and enforcement activities and create a truly fair business environment.

“We hope that the Indian authorities will abide by the law in carrying out their investigation and enforcement activities and create a truly fair, just and non-discriminatory business environment for Chinese companies investing and operating in India,” a Chinese Foreign Ministry spokesperson said.

According to the spokesperson of the Indian Ministry of External Affairs, companies operating here must abide by the laws of the country and he is confident that the authorities will take necessary action.