Xiaomi India, a mobile phone company, has made serious allegations that it threatened to inflict bodily harm if the ED did not respond during questioning. Xiaomi filed its case in the Karnataka High Court on May 4. Reuters reported on this. There has been no immediate reaction from the ED.
Manu Kumar Jain, former CEO of Xiaomi India, and Sameer B., current CFO, said: S. Said that Rao and his family would have to face serious consequences. Jain and Rao were arrested by the ED, threatened with career damage, complicity in crime and physical violence.”
However, Xiaomi officials declined to comment, saying the case was in court. Jain and Rao also did not respond to questions posed by the router. Jain is currently the vice president of Xiaomi International Group. Jain is credited with Xiaomi’s success in India. In 2021, Xiaomi accounted for 24% of the Indian smartphone market. Xiaomi has a total of 1,500 employees in India.
In particular, Xiaomi claims that its transactions are legal and claims that it has not paid any taxes. On Thursday, the court heard Xiaomi’s lawyers. Following this, the court temporarily suspended the action to freeze the ED’s bank accounts. The next hearing is set for May 12.
What exactly is the case?
In January, Xiaomi was accused of evading import duties worth Rs 653 crore. Following this, the ED launched an investigation into illegal remittances in February. The company was accused of sending money from India to China on behalf of the royals. The ED also alleged that the money was sent to companies from which Xiaomi did not receive any services.
Even after setting up mobile phone manufacturing plants in India, Chinese mobile companies continue to benefit companies owned by their parents in China through money laundering and bogus royalties, the ED said. On Saturday, the ED seized assets worth Rs 5,551.27 crore from Chinese smartphone maker Xiaomi Technology India Pvt Ltd for violating the Foreign Exchange Management Act (FEMA).
According to the ED, the amount seized by Xiaomi was in the company’s bank accounts. In February of this year, the ED launched an investigation into the company’s illegal remittance service. In April, Xiaomi’s global vice president, Manu Kumar Jain, was questioned on the matter.
According to a statement issued by the ED, the company started operations in India in 2014 and started sending remittances via remittance from 2015. The company sent foreign currency worth Rs 5,551.27 crore to three foreign institutions as royalties. . Including the Xiaomi Group. Large sums of money were sent through royalties at the behest of the original group in China. The money sent to the other two US-based entities was also indirectly diverted for the ultimate benefit of the Xiaomi group.
Explanation given by the company.
Xiaomi India has given an explanation behind ED’s action. The company says: “As a brand committed to India, all of our work is done in strict compliance with Indian rules and regulations. We have carefully studied the orders of government officials. We believe that our royalty payments and statements are completely accurate and valid.
Also Read: Analysis: Why Did ED Seize Rs 5,551 Crore From Xiaomi? Will this affect consumers?
Xiaomi has paid royalties for the licensed technology and IP used in the Indian version of our products. Payment of royalties is the legal business agreement of Shaomi India. “We are working with committed government officials to remove any confusion,” the company said.
Will it affect Xiaomi customers?
Xiaomi India has millions of customers in India. These customers will not be affected by ED’s action against the company. According to media reports, the government is encouraging Chinese companies to use local resources. The government wants Chinese companies to take over all services in India, instead of relying on their subsidiaries abroad, so that business here can prosper. The government is also tightening rules on foreign investment due to tensions on the border with China.