Chinese smartphone maker Xiaomi on Sunday said it was “disappointed” by India’s order freezing its $682 million (about Rs 55,800 crore) assets and would continue to protect its interests.
The Appellate Authority of India on Friday upheld an April order by India’s federal economic crime-fighting agency, the Enforcement Directorate, which imposed a fine of Rs. 5,551 crore, the investigation found that Xiaomi illegally remitted money as royalty payments to foreign entities.
The Chinese smart device firm said in a statement on Sunday that more than 84 percent of the Rs. 5,551 crore seized by the Enforcement Directorate earlier this year were royalties paid to US chipset company Qualcomm Group.
“We will continue to use all means to protect the reputation and interests of the company and our stakeholders,” it said.
Xiaomi India, an affiliate and one of the Xiaomi group companies, has entered into a legal agreement with Qualcomm to license its IP for the production of smartphones, the company said.
Both Xiaomi and Qualcomm believe that paying Qualcomm royalties for Xiaomi India is a legitimate business arrangement, the statement said.
Meanwhile, the competent authority observed that the payment of royalty is a means of remittance of foreign exchange out of India and is in “blatant violation” of the provisions of FEMA, it said.
With an 18 percent share each, Xiaomi and Samsung together lead India’s smartphone market, the world’s second largest after China. Accordingly On data from Counterpoint Research.
Many Chinese companies have struggled to do business in India due to political tensions following the border clashes in 2020.
India has since cited security concerns in banning more than 300 Chinese apps, including popular ones like TikTok, and tightened rules for Chinese companies investing in India.
© Thomson Reuters 2022
