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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Sujit Nair raises concerns over speculation of DMK-AIADMK understanding to block TVK
Chennai: Journalist and political commentator Sujit Nair has expressed concern over speculation that the Dravida Munnetra Kazhagam and the All India Anna Dravida Munnetra Kazhagam could explore a post-poll understanding to prevent Vijay-led Tamilaga Vettri Kazhagam from forming the government in Tamil Nadu.
In a social media post, Sujit Nair said the election verdict in Tamil Nadu reflected a clear public demand for political change and argued that the mandate should be respected irrespective of political preferences.
Referring to reports and political discussions surrounding a possible understanding between the DMK and AIADMK, he said he hoped such developments remained only speculative conversations and did not turn into reality.
Nair stated that if such an alliance were to take shape, it would raise serious questions about ideological politics in the country. He said TVK had emerged through a democratic electoral process and that the legitimacy to govern in a parliamentary democracy comes from the people’s verdict.
According to him, attempts to prevent an electoral winner from forming the government through unexpected political arrangements may be constitutionally valid, but many people could view them as politically opportunistic.
He further said that such a move could particularly affect the political image of the DMK, which has historically projected itself around ideology, social justice and opposition politics. Nair said that in ideological terms, the DMK appeared closer to TVK than to the AIADMK, and joining hands with its long-time political rival only to remain in power could weaken its broader political narrative.
He added that the same questions would apply to the AIADMK as well, as the party had spent decades positioning itself against the DMK and such an arrangement could create discomfort among its cadre and supporters.
Drawing a comparison with Maharashtra politics in 2019, Nair said he had expressed similar views when the Shiv Sena formed an alliance with the Indian National Congress and the Nationalist Congress Party after the Assembly elections.
He said post-poll alliances between long-standing political rivals often create a public perception that ideology and electoral mandates become secondary when political power equations come into play.
Nair also said such developments increase public cynicism towards politics and reinforce the belief among voters that ideology is often sidelined after elections.
He maintained that the Tamil Nadu verdict was emphatic and said respecting both the spirit and substance of the mandate was important for the credibility of democratic politics.
