Enforcement Directorate (ED) seizes Rs 5,551 crore of Xiaomi India under the FEMA law |Techstudiz

Enforcement Directorate (ED) seizes Rs 5,551 crore of Xiaomi India under the FEMA law:

Enforcement Directorate (ED) had questioned Manu Kumar Jain, Xiaomi’s global vice-president, in connection with alleged illegal remittances made by the company.

                                                           online source image/edited

 The move comes days after the company questioned the global vice president of Chinese mobile maker for alleged forex violations, The Enforcement Directorate (ED) on Saturday registered a case under the Foreign Exchange Management Act (FEMA), Under the provisions of the 1999 Act, 5 nos,Rs 551.27 crore seized .

The company is a wholly-owned subsidiary of the Chinese conglomerate. According to the ED, the seized money was lying in the bank accounts of the company and the ED had initiated a probe into the illegal remittances made by the company in February this year.

Earlier this month, the agency had questioned Manu Kumar Jain, global vice-president of the company, in connection with the case.

"The company started operations in India in 2014 and remitted money in 2015," the ED said in a statement." The company has remitted INR 5551.27 crore in foreign currency to three foreign-based entities, including one of the group. Unit in the guise of royalty. Such a huge amount was sent in the name of royalty on the instructions of their Chinese-origin group entities. The money remitted to the other two U.S.-based unrelated entities was also for the ultimate benefit of the entities belonging to the group. "

According to the ED, Mi India is a merchant and distributor of mobile phones in India under the brand name of MI.

ED has seized Rs.5551.27 Crore of M/s Xiaomi Technology India Private Limited lying in the bank accounts under the provisions of Foreign Exchange Management Act, 1999 in connection with the illegal outward remittances made by the company.

— ED (@dir_ed) April 30, 2022

The company buys fully manufactured mobile sets and other products from makers in India. The company has not taken any services from the three foreign-based entities to whom such funds have been transferred. Under the guise of various unrelated documentary fronts created between the group entities, the company remitted this amount in the guise of royalty abroad which is in violation of Section 4 of FEMA. "The company has also furnished misleading information to the banks while remitting money abroad," the ED said in a statement."