Indian authorities accuse Xiaomi of illegally transferring funds to foreign countries

According to the "Russian Satellite News Agency", India's anti-financial crime agency issued formal notices to Xiaomi's Indian branch, company leaders and three banks within the framework of the investigation, accusing them of suspected violations of India's "Foreign Exchange Management Act".

According to investigations, Chinese smartphone manufacturer Xiaomi illegally transferred funds to foreign organizations. The notice was issued under the Foreign Exchange Management Act and involved the transfer of funds of 55.51 billion Indian rupees (approximately US$673.2 million).

In addition to Xiaomi Technology India Private Limited, Xiaomi India, the notice was also sent to Xiaomi Technology India Chief Financial Officer Sameer BS Rao, former Managing Director Manu Kumar Jain, Citibank, HSBC and Deutsche Bank bank.

India's financial crime agency said Xiaomi began using misleading information in 2015 to illegally transfer funds abroad on the pretext of paying royalties. Last year, the agency froze Xiaomi's assets in India, confirming that Xiaomi had engaged in illegal fund transfers by forging royalties payments to foreign organizations. But Xiaomi disputes the accusations, saying it pays royalties legally. In April this year, the High Court of Karnataka in southwestern India dismissed Xiaomi’s lawsuit.

Xiaomi has invested heavily in India in recent years, including building production plants and launching cheap smartphones for Indian consumers. 

Neither Xiaomi nor the three banks responded to requests for comment.

It is reported that foreign companies operating in India, especially Chinese companies, are facing increasing concerns and problems from Indian regulatory agencies. Indian authorities are increasingly vigilant in enforcing financial rules and investigating alleged irregularities such as tax evasion, money laundering and violations of foreign exchange rules.