The Competent Authority under the Foreign Exchange Management Act (FEMA) has approved forfeiture orders of more than Rs. The ED said on Friday that Chinese mobile phone maker Xiaomi’s deposits amounted to ₹5,551 crore, which is the highest ever deposited in India.
The Enforcement Directorate (ED) had on April 29 issued the seizure order under FEMA and subsequently sent it for approval of the competent authority, as required under the law governing foreign exchange violations in the country.
The federal agency said in a statement that an order under Section 37A of FEMA has been issued against Xiaomi Technology India Pvt.
The Competent Authority appointed under FEMA has confirmed the forfeiture order of Rs. 5551.27 crore dated 29.04.2022 passed by ED against Xiaomi Technology India Private Limited under the provisions of FEMA.
— ed (@dir_ed) September 30, 2022
“This is the highest amount of seizure order in India that the authorities have confirmed so far.”
“The Authority while confirming the seizure of Rs 5,551.27 crore said that the ED is correct in holding that foreign exchange equivalent to Rs 5,551.27 crore has been unauthorizedly transferred out of India by Xiaomi India and held outside India of the group entity in contravention of Section 4 of FEMA,” the agency said.
The Competent Authority also observed that payment of royalty is nothing but a tool to move foreign exchange out of India and is a “gross violation” of the provisions of FEMA.
Xiaomi is a trader and distributor of mobile phones in the country under the brand name of MI and Xiaomi India is a wholly owned subsidiary of the China-based Xiaomi Group.
Earlier in August, it was reported that Xiaomi has issued three showcase notices with an estimated fee liability of around Rs. 653 crores, out of which he earned only Rs. 46 lakh, as told by Finance Minister Nirmala Sitharaman to Parliament.
The ED seized Rs. 5,551.27 crore of Xiaomi Technology India – a wholly owned subsidiary of China-based Xiaomi Group – under the Foreign Exchange Management Act (FEMA) in connection with illegal remittances made by the firm in February this year.
