Chinese smartphone maker Xiaomi on Sunday said it was “disappointed” with an Indian executive order that froze its $682 million (nearly Rs 55,800 crore) assets and would continue to protect its interests.
The Indian appeals body on Friday upheld an April order from India’s federal financial crime enforcement agency, the Enforcement Authority, to seize Rs. 5,551 crores, saying that the investigation found that Xiaomi was making illegal money transfers to foreign entities, passing them off as royalty payments.
The Chinese smart device company said in a statement on Sunday that more than 84 percent of Rs. The Rs 5,551 crores seized by the Enforcement Office earlier this year were royalties made by US chip company Qualcomm Group.
“We will continue to use all means to protect the reputation and interests of the company and our stakeholders,” the message says.
The company said that Xiaomi India is an affiliate and one of the companies of the Xiaomi group that has entered into a legal agreement with Qualcomm to license intellectual property for the production of smartphones.
Both Xiaomi and Qualcomm believe this is a legitimate commercial arrangement for Xiaomi India to pay royalties to Qualcomm, the statement said.
Meanwhile, the competent authority noted that the payment of royalties is nothing more than a tool to transfer foreign exchange from India, which is also a “blatant violation” of FEMA regulations, the report said.
With a share of 18 percent each, Xiaomi and Samsung together lead the smartphone market in India, the second largest in the world after China. according to Counterpoint Research data.
Many Chinese companies have struggled to do business in India due to political tensions since the 2020 border clash.
Since then, India has cited security concerns, banning more than 300 Chinese apps, including popular ones like TikTok, and tightening rules on Chinese companies investing in India.
© Thomson Reuters 2022