Winning Bizness Desk
Mumbai. The Enforcement Directorate (ED) has raided Chinese smartphone maker Xiaomi and has seized an amount of Rs 5,551 crore from its Bangalore office. The company is accused of illegally sending its earnings out of India. The company did this rigging in February this month, after which this action was taken. The ED says that the tech company was misappropriating such huge amounts in the name of royalty at the behest of its parent company based in China.
Fines imposed under the FEMA Act
According to the ED, the three companies to whom Xiaomi has sent money, do not have any business relation with Xiaomi India. The agency said that the Xiaomi group created various stories and masks to hide this fraud. The remittance of a company's earnings outside India in the name of royalty is a violation of section 4 of the Foreign Exchange Management Act (FEMA). The company also lied to the bank about sending money outside India. A few months ago, Xiaomi's Global Vice President Manu Jain appeared before the ED for breaking the FEMA rule.
Income tax department has also raided
The penalty imposed under the FEMA Act is 3 times the penalty for breaking the rule. Apart from Xiaomi, the Income Tax Department has also raided many business locations of other Chinese mobile companies. The government has also banned many Xiaomi smartphone applications for security reasons.
Xiaomi has been leading the Indian smartphone market for the past several quarters. Despite the lack of smartphone shipments in India, the company remained ahead with a 22% market share in the fourth quarter of 2021.