Enforcement Directorate Approves Seizure Of Xiaomi’s Rs 5551 Crore: FEMA Rules Violated

‘An authority appointed under the foreign Exchange Management Act (FEMA) has approved the seizure order issued by the Enforcement Directorate against Xiaomi Technology India Private Limited for Rs 5,551.27 crore on Friday.

Enforcement Directorate Approves Seizure Of Xiaomi's Rs 5551 Crore: FEMA Rules Violated


ED had accused Xiaomi of sending foreign remittances since 2015 to three foreign entities including one Xiaomi group entity.

The amounts remitted to the two other U.S.-based unrelated entities were also for the ultimate benefit of the group’s concerns, as alleged.

The company had procured completely manufactured mobile sets and other products from Indian producers but transferred the amount to these three entities despite not availing any of their services.

Highest amount seized till date

ED said that the company started its operations in India in the year 2014 and started remitting the money from the year 2015.

It added, “This is the highest amount of seizure order in India which has been confirmed by the Authority till date”.

The money was held outside India on behalf of the group entity which is in contravention of Section 4 of the Foreign Exchange Management Act, 1999.

The violations

Royalty was being used as a tool to transfer money outside of India which is a violation of Section 4 of the FEMA, accusing the company of remitting the said amount abroad in the guise of royalty.

Hence, the same is liable to be seized in terms of provisions of Section 37A of the FEMA.
A response from the company to the development is awaited.

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