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The ED seized the accounts of the local unit of China's Xiaomi in April this year...
Digital Desk: The Enforcement Directorate announced on Friday that the competent authority under the Foreign Exchange Management Act (FEMA) confirmed its order to confiscate $5,551.27 crore from Xiaomi India's bank accounts.
The ED order to seize Xiaomi Technology India Pvt Ltd's bank accounts is the largest approved by the quasi-judicial authority under foreign exchange rules to date, it claimed.
The authorities determined that the ED was correct in determining that foreign exchange equivalent to 5,551.27 crores had been transported out of India by Xiaomi India in an unauthorized manner in violation of the Foreign Exchange Management Act and that this sum was subject to seizure, according to a news release from the agency.
The ED seized the accounts of the local unit of China's Xiaomi in April this year. The agency alleged that the company had remitted an equal amount in the guise of royalty abroad, in violation of FEMA.
According to the ED, the competent authority stated in its ruling that royalty payments were nothing more than a means of sending money outside of India.
Xiaomi India's writ petition against the seizure decision had been denied by the High Court of Karnataka on July 5, it added.
The investigation into the alleged unlawful remittances began in February of this year.
The ED said that "large amounts in the name of royalties" were remitted on the directions of the local unit's parent group companies in China. "The amount remitted to other two US-based unrelated entities was also for the ultimate benefit of the Xiaomi group entities," it said.
When the ED questioned its top executives, the Chinese smartphone manufacturer claimed that threats of "physical assault" and coercion were made against them. The ED refuted this claim, calling it "untrue and unjustified."
In a statement released by the ED on Friday, Xiaomi India claimed that it purchases fully assembled mobile phones and other products from Indian manufacturers and that it has not used any services provided by the three foreign-based companies to which the money was transferred. "The company also provided misleading information to the banks while remitting the money abroad," it alleged.
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