The Competent Authority appointed under Foreign Exchange Management Act (FEMA) has confirmed the seizure order of Rs 5,551.27 crore dated April 29 passed by the Enforcement Directorate (ED) against Chinese smart phone company Xiaomi Technology India Private Limited under the provisions of the foreign exchange law.
“This is the highest amount of seizure order in India which has been confirmed by the Authority till date. The Authority while confirming the seizure of Rs. 5551.27 Crore, held that ED is right in holding foreign exchange equivalent to INR 5,551.27 crore has been transferred out of India by the Xiaomi India in an unauthorised manner and is held outside India on behalf of the group entity is in contravention of Section 4 of the Foreign Exchange Management Act, 1999 and the same is liable to be seized in terms of provisions of Section 37A of the FEMA,” the ED said in a statement. The Competent Authority also observed that payment of royalty is nothing but a tool to transfer the foreign exchange out of India and the same is in blatant violation of provisions of FEMA, it said.
Earlier, the ED had seized Rs 5,551.27 crore of Xiaomi Technology India Private Limited lying in its bank accounts under the provisions of FEMA. The company unauthorisedly remitted this amount in guise of Royalty abroad which constitute violation of Section 4 of the FEMA.
Xiaomi India also filed a writ petition before the Karnataka High Court against the said order which was dismissed by the HC vide order dated July 5. PNS
Xiaomi India is a wholly owned subsidiary of China-based Xiaomi group. This amount of Rs 5,551.27 crore lying in the bank accounts of the company has been seized by the ED.
The ED had initiated investigation in connection with the illegal remittances made by the company in February this year.
The Company started its operations in India in 2014 and started remitting the money from 2015. The Company has remitted foreign currency equivalent to Rs 5,551.27 crore to three foreign based entities which include one Xiaomi group entity in the guise of Royalty.