India seizes $725 million from Chinese phone company Xiaomi over remittances

NEW DELHI —  Indian authorities on Saturday seized $725 million from Chinese smartphone company Xiaomi, accusing it of breaking the country’s foreign exchange laws by making illegal remittances abroad, officials said.

The Enforcement Directorate, India’s financial investigation agency, tweeted that it had seized the amount from Xiaomi’s local unit. The move comes after an investigation was launched by the federal agency in February over concerns of illegal remittances, local media reported.

The agency said the smartphone maker had transferred $725 million to “three foreign-based entities” under the guise of royalty payments, according to a statement quoted by the Press Trust of India. Earlier this month, the agency had also questioned Xiaomi’s global vice president, Manu Kumar Jain, at the company’s regional office in the southern city of Bengaluru, PTI reported.

The smartphone company said that it complied with local laws and that its “royalty payments and statements” were “legit and truthful.” It said it is committed to working closely with the government to clarify the issues.

“These royalty payments that Xiaomi India made were for in-licensed technologies and IPs used in our Indian version products. It is a legitimate commercial arrangement for Xiaomi India to make such royalty payments,” the statement said.

Two years ago, India banned more than 100 Chinese-owned apps as tensions between the countries soared over border clashes. In June 2020, Indian and Chinese troops fought with clubs, stones and fists along a disputed section of their border, leaving 20 Indian soldiers and four Chinese soldiers dead.

Since February 2021, both countries have withdrawn troops from some sites, but they still maintain a presence. In March, Chinese Foreign Minister Wang Yi traveled to New Delhi to discuss expediting the disengagement of troops and the possibility of de-escalating the situation.