Xiaomi is the latest major Chinese company to withstand the heat in India

India has seized more than $ 700 million from one of China’s largest tech companies for allegedly moving money out of the country illegally.

In a statement on Friday, India’s Directorate of Enforcement – the country’s chief economic investigative body – accused smartphone maker Xiaomi’s Indian subsidiary of violating foreign exchange laws by making “illegal remittances”.
The agency said that Xiaomi India, acting on the instructions of its parent company, had “sent foreign currency equivalent to [55.5 billion, $ 726 million] to three foreign entities comprising a unit of the Xiaomi Group in the guise of royalties.”
Xiaomi started its operations in India in 2014 and started sending money a year later, the agency added. Indian authorities have now seized the equivalent amount “in the company’s bank accounts”.
“Xiaomi India buys fully manufactured mobile sets and other products from manufacturers in India,” said the Directorate of Enforcement. “Xiaomi India has not received any services from the three foreign entities to which this amount has been transferred,” the agency added.
The company has also been accused of giving “misleading information to banks while sending money abroad”.
Xiaomi India, the distributor of Mi-branded smartphones, said in a statement, “All our operations are in strict compliance with local laws and regulations.” In a Twitter post on Saturday, the company said that the royalty payments and statements made to the bank were “all legal and true.”
The payments were made for “licensed technology and IP used in our India version products”.
India is tightening its grip on Chinese companies after border tensions between the world’s most populous countries escalated two years ago. In 2020, India banned more than 200 apps – many of them Chinese – including the hugely popular video platform TikTok.
Earlier this year, India again banned a number of Chinese apps belonging to tech companies such as Tencent (TCEHY), Alibaba (BABA) and NetEase (NTES). In response, Beijing said it was “seriously concerned” about India’s actions against Chinese companies.