Ex-Xiaomi India chief Manu Jain summoned by ED in exchange probe

The Directorate of Law Enforcement (ED) has summoned a former Indian director of Chinese company Xiaomi Corporation as part of an investigation into whether the company’s business practices complied with Indian foreign exchange laws , two sources with direct knowledge told Reuters.

The ED has been investigating the company since at least February and in recent weeks asked Manu Kumar Jain, Xiaomi’s former chief executive for India, to appear before its executives, the sources said.

Jain, now global vice president of Dubai-based Xiaomi, was currently in India, the sources said, although the purpose of his visit was unclear.

Asked about the investigation, a Xiaomi spokesperson said the company adheres to all Indian laws and is “fully compliant with all regulations”.

“We are cooperating with the authorities in their ongoing investigation to ensure they have all of the required information,” the statement said.

The actions signal scrutiny of the Chinese smartphone maker, whose office in the country was raided in December as part of a separate investigation into alleged tax evasion. Some other Chinese smartphone markers were also attacked at the time.

Jain did not respond to a request for comment. The Law Enforcement Branch has also not responded, although the agency generally does not make details public while investigations are ongoing.

The agency is reviewing existing business structures between Xiaomi India, its contractors and its parent entity in China, according to the first source, which said the flow of funds between Xiaomi India and its parent entity, including royalty payments , were being verified.

Application Management, via a February notice to Xiaomi’s Jain, requested various company documents, the second source familiar with the developments said.

These included details of foreign funding, shareholding and financing schemes, financial statements and information on key company executives, the source said.

Xiaomi remains the country’s top smartphone vendor in 2021, with a 24% market share, according to Counterpoint Research. South Korea’s Samsung Electronics was the No. 2 brand with a 19% market share.

Xiaomi also markets other tech gadgets in India including smartwatches and TVs.

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