India seizes USD 725 million worth of assets from Xiaomi

According to Reuters, India’s Enforcement Directorate seized USD 725 million from Xiaomi when it was discovered that the smartphone maker had made illegal payments to foreign entities disguised as royalty payments.

According to the directorate, Xiaomi’s Indian division broke foreign exchange restrictions by sending the equivalent of INR 55.5 billion to three foreign-based firms. The directorate further added that the amount remitted to two unrelated entities in the U.S was made for the “ultimate benefit of the Xiaomi group entities” and that such huge amounts of royalties by Xiaomi’s Indian division were under the instruction of their Chinese parent company.

The directorate has also stated that Xiaomi has “provided misleading information to the banks while remitting the money abroad.”. Reuters reported that the ED had asked for statements and details on the company, and had summoned Manu Kumar Jain, Xiaomi’s former India head earlier this year for questioning as part of their investigation.

Xiaomi India has already posted its response to the controversy stating that all royalty payments to the bank were in fact, legitimate and truthful. As well that these payments were made for in-licensed technologies and intellectual properties on Xiaomi’s Indian version products.  They ended by stating that the company is committed to working closely with the government in clarifying misunderstandings.

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