India accuses Xiaomi of currency violations in latest China clash

MUMBAI/NEW DELHI (BLOOMBERG) – India has accused Xiaomi of breaking the country’s foreign exchange laws and seized 55.51 billion rupees (S$1.01 billion) from a local unit of the smartphone maker, in India’s latest clash with a Chinese company over their activities in the market.

India’s anti-money laundering agency has taken control of Xiaomi Technology India’s bank accounts under the provisions of the Foreign Exchange Management Act, it said in a statement. The company’s local unit handed over money to three overseas-based entities with ties to Xiaomi, falsely claiming they were royalty payments, the Enforcement Branch said. the law.

“Xiaomi India sources the fully-manufactured mobile sets and other products from manufacturers in India,” the agency said in its statement. “The company also provided misleading information to banks when transferring the money overseas.”

India has taken a hard line against Chinese companies operating in the country since troops from the two countries clashed in 2020. India has blacklisted more than 200 mobile apps from Chinese vendors, including services Alibaba Group’s shopping mall, ByteDance’s short TikTok video, and apps used on Xiaomi phones.

Last month, Chinese Foreign Minister Wang Yi visited his counterpart, Subrahmanyam Jaishankar, for the first time since border tensions erupted in a bid to restore relations. “I would describe our current situation as a work in progress,” Jaishankar said at the time.

Xiaomi has challenged the seizure of India’s assets, arguing that its royalty payments are justified and its statements to financial institutions are accurate. Xiaomi has been one of the most successful smartphone brands in the fast-growing market, becoming the largest in terms of shipping volumes in the country.

“All of our operations strictly comply with local laws and regulations,” Xiaomi India said in its Twitter post. “These royalty payments made by Xiaomi India were for licensed technologies and IP addresses used in our Indian version products. It is a legitimate business agreement for Xiaomi India to make such royalty payments.”

The company did not say what steps it would take next or whether it would take legal action to recover its assets. “We are committed to working closely with government authorities to clarify any misunderstandings,” he said.