Xiaomi disappointed over ED order to attach assets worth Rs 5,500 crore
Chinese smartphone maker Xiaomi said on Sunday it was “disappointed” over an Indian order freezing $682 million (nearly Rs 5,551 crore) of its assets and that it would continue to protect its interests.
An Indian appellate court on Friday upheld an April order by India’s federal financial crimes agency, the Enforcement Directorate, to seize Rs 5,551 crore. The agency said an investigation had revealed that Xiaomi had made illegal transfers to foreign entities by passing them off as royalty payments.
The Chinese smart devices company said in a statement on Sunday that over 84 percent of the Rs 5,551 crore seized by the Enforcement Directorate earlier this year was the royalty payment made to US chipset company Qualcomm Group.
“We will continue to use all means to protect the reputation and interests of the company and our stakeholders,” the press release said.
The company said Xiaomi India is a subsidiary and one of the companies of the Xiaomi Group, which has entered into a legal agreement with Qualcomm to license intellectual property for the production of smartphones.
Both Xiaomi and Qualcomm believe that it is a legitimate commercial arrangement for Xiaomi India to pay royalties to Qualcomm, the statement said.
Meanwhile, the competent authority 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, the authority said.
With an 18 percent share each, Xiaomi and Samsung jointly lead the smartphone market in India, the second largest in the world after China. according to according to data from Counterpoint Research.
Many Chinese companies are struggling to do business in India due to political tensions following a border clash in 2020.
India has since relied on more than 300 Chinese apps, including popular ones like TikTok, for security reasons, and has also imposed stricter rules on Chinese companies investing in India.
© Thomson Reuters 2022
