Nature

ED’s seizure of Xiaomi India assets worth $725 million should be stayed by an Indian court


An Indian court has suspended a federal law enforcement agency’s decision to seize $725 million (approximately Rs 5,570 crore) from Chinese Xiaomi’s local bank accounts for alleged violation of foreign exchange laws , two sources told Reuters on Friday.

The law enforcement branch last week seized the bank assets of Xiaomi Technology India Private Limited, saying it discovered that the company had illegally transferred funds to three overseas-based entities, including one of the Xiaomi group, “under cover of royalty payments”.

Xiaomi had denied any wrongdoing, saying its “royalty payments and statements to the bank are all legitimate and true”. He then filed a challenge against the decision of India’s financial crime agency in the High Court of the southern state of Karnataka.

On Thursday, after hearing from Xiaomi’s lawyers, a judge suspended the decision of the Law Enforcement Branch, said the two sources, who declined to be identified because they were not authorized to speak to the media.

Xiaomi and Application Management did not immediately respond to requests for comment. The court’s written order is not yet public.

The relief was granted on the condition that Xiaomi notify Indian authorities of remittances such as royalty payments, one of the sources said.

The case will next be heard on May 12, according to the Indian court’s website.

Xiaomi was India’s top smartphone seller in 2021, with a 24% market share, according to Counterpoint Research.

Reuters reported earlier that Xiaomi’s former Indian chief Manu Kumar Jain was summoned and questioned as part of the management’s investigation.

Many Chinese companies have struggled to do business in India due to political tensions following a border clash in 2020. India has cited security concerns by banning more than 300 Chinese apps since then, including including popular apps such as TikTok, and has also tightened standards for Chinese companies investing in India.

© Thomson Reuters 2022


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