India said on Saturday it had seized $725 million from the local bank accounts of China’s Xiaomi Corp (1810.HK) after a probe found the smartphone maker had made illegal remittances to foreign entities by passing them off as royalty payments. Indian authorities accuse Xiaomi of breaking the country’s foreign exchange laws by making illegal remittances abroad, officials said.
The smartphone company said it complied with local laws and added that its “royalty payments and statements” were “legit and truthful,” according to a statement quoted by New Delhi Television.
The Enforcement Directorate, India’s financial investigation agency, tweeted that it had seized the amount from Xiaomi’s local unit. The move comes after an investigation was launched by the federal agency in February over concerns of illegal remittances, local media reported.
The agency said the smartphone maker had transferred $725 million to “three foreign based entities” under the guise of royalty payments, according to a statement quoted by the Press Trust of India. Earlier this month, the agency had also questioned Xiaomi’s global vice president, Manu Kumar Jain, at the company’s regional office in the southern city of Bengaluru, PTI reported.
Two years ago, India banned over 100 Chinese-owned apps as tensions between the countries soared over border clashes. In June 2020, Indian and Chinese troops fought with clubs, stones and fists along a disputed section of their border, leaving 20 Indian and four Chinese soldiers dead.
Since February last year, both countries have withdrawn troops from some sites, but they still maintain a presence. In March, Chinese Foreign Minister Wang Yi traveled to New Delhi to discuss expediting the disengagement of troops and the possibility of de-escalating the situation.
