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 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 on 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.
Enforcement Directorate approves seizure of Xiaomi's asset worth ₹5,551.27 crore
The competent authority appointed under Section 37A of the Foreign Exchange Management Act (FEMA) on Friday confirmed the seizure order of ₹5,551.27 crores by Enforcement Directorate against Xiaomi Technology India Private Limited, ED said in a press release
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ED in a press release said, "The Competent Authority appointed under Section 37A of the Foreign Exchange Management Act has confirmed the seizure order of Rs. 5551.27 Crore dated 29.04.2022 passed by the Directorate of Enforcement (ED) against Xiaomi Technology India Private Limited under the provisions of FEMA"
It added"The Authority while confirming the seizure of Rs. 5551.27 Crore, held that ED is right in holding foreign exchange equivalent to INR 5551.27 Crore has been transferred out of India by the Xiaomi India in an unauthorised manner and is held outside India on behalf of the group entity is in contravention of Section 4 of the Foreign Exchange Management Act, 1999 and the same is liable to be seized in terms of provisions of Section 37A of the FEMA"
It also observed royalty was being used as a tool to transfer money outside of India which constituted a violation of Section 4 of the FEMA while accusing the company of remitting the said amount abroad in the guise of royalty.
This is also the highest ever amount of seize order issued by the authority to date.
ED also accused Xiaomi of sending foreign remittances since 2015 to three entities in the name of royalty with the total amount sent to date amounting to ₹5551.27 crore.
It said, "The Company started its operations in India in the year 2014 and started remitting the money from the year 2015. The Company has remitted foreign currency equivalent to INR 5551.27"
Xiaomi India had approached the Karnataka High Court in July this year against the raids and seizure by ED, but the high court had directed it to first approach the competent authority.
Enforcement Directorate approves seizure of Xiaomi's asset worth ₹5,551.27 cr
The competent authority appointed under Section 37A of the Foreign Exchange Management Act (FEMA) on Friday confirmed the seizure order of ₹5,551.27 crores by Enforcement Directorate against Xiaomi Technology India Private Limited, ED said in a press release
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