According to the report, the competent body under the Foreign Exchange Management Act (FEMA) granted a seizure order for more than Rs 5,551 crore in deposits of Chinese mobile phone giant Xiaomi, the largest sum frozen to date in India. The ED on Friday.
The Execution Directorate (ED) issued the embargo order under FEMA on April 29 and then forwarded it to the responsible authority for confirmation, as required under the legislation that governs foreign exchange breaches in the nation.
The decision was issued under FEMA Section 37A against Xiaomi Technology India Private Ltd, according to a statement from the federal agency. “This is the biggest seizure warrant amount confirmed by the authorities in India to date.”
“While confirming the seizure of Rs 5,551.27 crore, the authority held that the ED is correct in holding that Xiaomi India transferred foreign currency equivalent to Rs 5,551.27 crore out of India in an unauthorised manner and kept out of India on behalf of the group entity in violation of FEMA Section 4,” the agency stated.
The competent authority further stated that royalties are nothing more than a mechanism for transferring foreign cash out of India, and that this is a “flagrant breach” of FEMA laws.
Under the MI brand, Xiaomi is a mobile phone dealer and distributor in the nation, and Xiaomi India is a wholly-owned subsidiary of the China-based Xiaomi Group.