Chinese smartphone maker Xiaomi on Sunday said it was “disappointed” with an Indian order that froze $682 million (nearly Rs. 5,551 crore) of its assets and would continue to protect its interests.
An Indian appellate authority on Friday confirmed an April order by India’s federal financial crime fighting agency, the Enforcement Directorate, to seize Rs. 5,551 crore, saying a probe found Xiaomi had made illegal remittances to foreign entities by passing them off as royalty payments.
The Chinese smart devices firm in a statement on Sunday said that over 84 percent of Rs. 5,551 crore seized by the Enforcement Directorate earlier this year was the royalty payment made to the US chipset company Qualcomm Group.
“We will continue to use all means to protect the reputation and interests of the company and our stakeholders,” it said.
Both Xiaomi and Qualcomm believe that it is a legitimate commercial arrangement for Xiaomi India to pay Qualcomm royalty, the statement said.
Meanwhile, the competent authority observed that the payment of royalty is nothing but a tool to transfer the foreign exchange out of India and the same is in “blatant violation” of the provisions of FEMA, it said.
Many Chinese companies have struggled to do business in India due to political tensions following a border clash in 2020.
India has cited security concerns in banning more than 300 Chinese apps since then, including popular ones such TikTok, and also tightened rules for Chinese companies investing in India.
© Thomson Reuters 2022