India has seized around $725 million worth of assets from Xiaomi India after the country’s anti-money laundering agency found the subsidiary had violated local foreign exchange laws. According to Reuters, India’s law enforcement agency announced on Saturday that it recently discovered that Xiaomi made illegal transfers when it attempted to pass off some transfers as royalties.
That money went to three foreign companies, including one under the broader Xiaomi banner. The Enforcement Directorate found that Xiaomi had designed the payments to benefit itself. “Such huge amounts in the name of royalties were transferred on the instructions of their Chinese parent companies,” the agency said. Indian law enforcement began investigating the subsidiary last December, along with a handful of other local Chinese firms. She accused Xiaomi of “providing misleading information to the banks while the money was being transferred abroad.”
On Twitter, Xiaomi called it believes its payments were legitimate. “These royalties paid by Xiaomi India were for the in-licensed technologies and IPs used in our Indian version products,” the company explained. “We are committed to working closely with government authorities to resolve any misunderstandings.” We have contacted the company for more information and comments.
Last year, Xiaomi was India’s leading smartphone maker with a 24 percent market share. But like many Chinese companies in India lately, it has been forced to navigate a regulatory regime less conducive to Chinese business interests. In 2021, India temporarily banned TikTok following the country’s border dispute with China and later reportedly refused to allow Wi-Fi devices to encourage domestic manufacturing.
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