FEMA authority approves India's biggest fund seizure order Rs 5,551 crore of Chinese firm Xiaomi: ED
New Delhi, Sep 30: The competent authority under the Foreign Exchange Management Act (FEMA) has approved an order of seizure of over Rs 5,551 crore worth of deposits of Chinese mobile phone manufacturer Xiaomi -- the highest amount frozen till date in India -- the ED said Friday.
The agency charged the popular Chinese phone maker with remitting foreign currency equivalent to Rs 5,551.27 crore to three entities -- one Xiaomi Group company and two US-based unrelated entities -- in the guise of royalty.
The Enforcement Directorate (ED) had first issued the order of seizure of these bank deposits on April 29 under the FEMA and later sent it for approval of the competent authority, as required under the law that regulates foreign exchange violations in the country.
"The competent authority appointed under section 37A of the FEMA has confirmed the seizure order of Rs 5551.27 crore (dated 29.04.2022) passed by the Directorate of Enforcement against Xiaomi Technology India Private Limited under the provisions of FEMA."
"This is the highest amount of seizure order in India which has been confirmed by the authority till date," the federal agency said in a statement.
A competent authority under the FEMA is an officer appointed by the central government to adjudicate an ED seizure order issued under the law. Such an officer should not be below the rank of a joint secretary.
The authority, it said, while confirming the seizure order held that the ED is "right in holding" that foreign exchange equivalent to Rs 5,551.27 crore has been transferred out of India by Xiaomi India in an "unauthorised" manner and is held outside India on behalf of the group entity in contravention of Section 4 of the FEMA.
The agency charged that Xiaomi India did not avail any service from the three foreign based entities to whom such amounts have been transferred.
"Under the cover of various unrelated documentary facade created amongst the group entities, the company remitted this amount in guise of royalty abroad which constitute violation of Section 4 of the FEMA."
"The company also provided misleading information to the banks while remitting the money abroad," it alleged.
The agency said the competent authority also observed that the payment of royalty is nothing but a tool to transfer the foreign exchange out of India and the same is in "blatant violation" of the provisions of FEMA.
Xiaomi started its operations in India in the year 2014 and started remitting the money from the year 2015, probe found.
The company has remitted foreign currency equivalent to INR 5,551.27 crore to three foreign-based entities which include one Xiaomi Group entity in the guise of royalty.
"Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities. The amount remitted to other two US-based unrelated entities were also for the ultimate benefit of Xiaomi group entities," it said.
Xiaomi India is a trader and distributor of mobile phones in India under the brand name of MI. It procures completely manufactured mobile sets and other products from the manufacturers in India.
Xiaomi India had also filed a writ petition before the Karnataka High Court against the order issued by the ED in April, which the agency said, was "dismissed" by the court on July 5.
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Poll boycott in Chamarajnagar village: Govt officers, voter injured; booth, EVM destroyed by protest
Chamarajnagar: In an untoward incident reported from Indiganatta village under the Mahadeshwara Hills Gram Panchayat administration limits in Hanur taluk, government officials were injured as they attempted at pacifying a group of angry voters who had declared they were boycotting the polls on Friday.
Tahsildar Guruprasad and Taluk Panchayat Chief Officer Umesh and a police inspector were reportedly injured in the clash. In addition, the protesters are learned to have destroyed the polling booth, including the electronic voting machine (EVM), set up in the village. One of the voters who visited the booth was reportedly injured in the head in the incident.
Angry over the non-availability of infrastructure in their village, the voters in Indiganatta declared that they would not exercise their right to franchise on Friday. Guruprasad, Umesh and the police officer, who were informed of the boycott, visited Indiganatta to appease the voters and get them to cast vote. The group of voters, however, directed their anger at the officers, resulting in the trio being injured.
The protesters in Indiganatta were not only adamant about their boycott, but also infuriated by the sight of other voters in the village cast ballot at the polling booth. In anger, they initially had an argument with the voters but later forced their way into the booth and reportedly destroyed the EVM there.
Polling is currently reported to have been stalled in Indiganatta due to the violent incident.
