In the framework of the investigation, India’s anti-financial crime agency issued a formal notice to the Indian branch of Xiaomi, the head of the company and three banks, accusing them of allegedly violating India’s Foreign Exchange Management Act.
Chinese smartphone maker Xiaomi has illegally transferred funds to foreign organizations, according to an investigation. The notice was issued in accordance with the Foreign Exchange Management Act and involved the transfer of funds of 55.51 billion Indian rupees (about $673.2 million).
In addition to Xiaomi Technology India Private Limited and Xiaomi India, the notice was also sent to Xiaomi Technology India Chief Financial Officer Sameer B.S. Rao, former managing director Manu Kumar Jain, as well as Citibank, HSBC and Deutsche Bank.
Indian Institute for Combating Financial crime said that Xiaomi began illegally transferring money out of the country in 2015 using misleading information and paying royalties. Last year, the agency froze Xiaomi’s assets in India, confirming that the company had made illegal money transfers by falsifying royalty payments to foreign organizations. But Xiaomi disputes the allegations, saying its royalty payments are legal. In April, the High Court of the southwestern state of Karnataka dismissed Xiaomi’s case.
Xiaomi has invested heavily in India in recent years, including setting up production plants and launching cheap smartphones aimed at Indian consumers.
Foreign companies operating in India, especially Chinese companies, are facing increasing attention and questions from Indian regulators. Indian authorities are increasingly vigilant in enforcing financial rules, investigating suspected violations such as tax evasion, money laundering, and foreign exchange regulations.