New Delhi: Enforcement Directorate (ED) on Saturday seized Rs 5551.27 crore of M/s Xiaomi Technology India Private Limited under the Provisions of Foreign Exchange Management Act (FEMA), 1999 on the allegations of illegal outward remittances.
Xiaomi India is a wholly owned subsidiary of China based Xiaomi group. The amount of Rs 5551.27 crore ($725m) lying in the bank accounts of the company was seized by the ED, the body said in a statement.
ED had initiated investigation in connection with the alleged illegal remittances made by the company in the month of February this year, ED said. The company started its operations in India in the year 2014 and started remitting money from 2015 onwards.
The company remitted foreign currency equivalent to Rs 5551.27 crore to three foreign based entities, the ED said. 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 the Xiaomi group entities, the statement said.
The Xiaomi India has allegedly not availed any service from the three foreign based entities to whom such amounts have been transferred.
The company remitted this amount in the guise of Royalty abroad which constitutes violation of Section 4 of the FEMA. The Company also provided misleading information to the banks while remitting the money abroad, ED said.