India High Court rejects bid to overturn seizure of US$676 million from Xiaomi amid sour India-China tech relations
- India’s federal financial crime agency says investigation uncovered years of remittance payments made by Xiaomi India to three foreign-based entities
- Xiaomi says contested payments were royalties paid for licensed technologies and an entirely legitimate part of its business operations
An Indian High Court on Friday rejected a plea from Xiaomi Group to return funds worth more than US$600 million after a year-long battle that began when the money was seized from the firm’s local subsidiary for alleged foreign exchange violations, as India-China tech relations remain sour.
The funds were seized in April 2022 after India’s federal financial crime agency, the Enforcement Directorate (ED), said an investigation had uncovered years of suspicious remittance payments made by Xiaomi India to three foreign-based entities.
At the time, ED said that Xiaomi India had not provided sufficient information on what goods or services had been exchanged for the payments. The agency alleged Xiaomi had hidden the payments “under the guise of royalties” in a violation of India’s Foreign Exchange Management Act.
“We are studying the matter and waiting for the written order,” said a Xiaomi India spokesperson about the decision by the High Court of Karnataka, the chief judicial authority in the Indian state of Karnataka.
“We’d like to reiterate that our operations in India are compliant with all local laws and regulations.”
According to the ED, the Chinese smartphone maker started its operations in India in 2014 and began making illegal remittance payments the following year to one Xiaomi Group affiliate and two other foreign companies, for an amount of 55.51 billion Indian rupees, worth about US$676 million today.