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Employees members stand close to the corporate brand at a Xiaomi retailer in Shanghai, China November 1, 2021. REUTERS/Aly Tune/Recordsdata

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NEW DELHI, April 30 (Reuters) – India mentioned on Saturday it had seized $725 million from the native financial institution accounts of China’s Xiaomi Corp (1810.HK) after a probe discovered the smartphone maker had made unlawful remittances to international entities by passing them off as royalty funds.

The Enforcement Directorate had been investigating the Chinese language firm’s enterprise practices over suspected violations of Indian international trade legal guidelines. learn extra

The monetary crime combating company mentioned on Saturday it had seized the checking account belongings from Xiaomi Know-how India Personal Restricted after discovering the agency had remitted the international foreign money equal of 55.5 billion rupees to 3 foreign-based entities, together with one Xiaomi group entity, “within the guise of royalty” funds.

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The remittance to 2 different unidentified and unrelated U.S.-based entities was additionally for “the last word advantage of the Xiaomi group entities”, the company added in a press release.

“Such enormous quantities within the identify of royalties have been remitted on the directions of their Chinese language mother or father group entities,” the directorate mentioned.

Xiaomi mentioned in a press release issued afterward Saturday that it complies with Indian legal guidelines and believed its “royalty funds and statements to the financial institution are all legit and truthful”.

“These royalty funds that Xiaomi India made have been for the in-licensed applied sciences and IPs utilized in our Indian model merchandise … we’re dedicated to working carefully with authorities authorities to make clear any misunderstandings,” it added.

The directorate’s actions in opposition to Xiaomi sign widening scrutiny of the Chinese language smartphone maker, whose India workplace was raided in December in a separate investigation over alleged earnings tax evasion. Another Chinese language smartphone markers have been additionally raided on the time.

Reuters reported on April 12 that Xiaomi’s former India head, Manu Kumar Jain, had been summoned for questioning as a part of the directorate’s investigation. learn extra

Jain, who’s now a world vp at Xiaomi based mostly in Dubai, appeared earlier than investigators earlier this month, mentioned a supply with direct data of the probe, asking to not be named as a result of sensitivity of the matter.

The Enforcement Directorate additionally requested the corporate for particulars of international funding, shareholding and funding patterns, monetary statements and data of key executives working the enterprise.

Xiaomi was India’s main smartphone vendor in 2021, with a 24% market share, based on Counterpoint Analysis. South Korea’s Samsung was the No. 2 model with a 19% share.

Many Chinese language corporations have struggled to do enterprise in India as a consequence of political tensions following a border conflict in 2020. India has cited safety considerations in banning greater than 300 Chinese language apps since then, together with fashionable ones like TikTok, and likewise tightened norms for Chinese language corporations investing in India.

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Reporting by Aditya Kalra in New Delhi; Enhancing by William Mallard, Helen Popper and Mike Harrison

Our Requirements: The Thomson Reuters Belief Ideas.

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