Forex Authority confirms Rs 5,551 Crore seizure of Xiaomi

The authority under the Foreign Exchange Management Act, or FEMA, has confirmed that the Enforcement Directorate was right in seizing Xiaomi’s funds, which the Chinese firm allegedly transferred out of India.

The ED said, “The Competent Authority appointed under Section 37A of FEMA has confirmed the seizure order of Rs 5551.27 crore …passed by the Directorate of Enforcement (ED) against Xiaomi Technology India Private Limited… This is the highest amount of seizure order in India which has been confirmed by the Authority till date.”

The ED seized Rs 5,551 crore of Xiaomi Technology India Pvt Ltd in April, the biggest seizure of funds in the country till date. In April, the ED said Xiaomi India sent the funds abroad in guise of royalty, which was a violation of the FEMA.

The ED added, “Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities. The amount remitted to two other US-based unrelated entities was also for the ultimate benefit of Xiaomi group entities.”

Xiaomi India has not used any service from the three foreign entities to whom the funds have been sent, the ED said, adding the phone maker also gave misleading information to banks while sending money abroad.

Xiaomi India had filed a petition before the Karnataka High Court over the funds seizure, alleging that its top executives faced threats and compulsion during questioning by the Enforcement Directorate in the illegal remittances case. The court dismissed the petition in July. The ED had called the allegations “untrue and baseless”.