ED’s seizure of $725 million in assets from Xiaomi India is set to be put on hold by the Indian court

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An Indian court has stayed a federal law enforcement agency’s decision to seize $725 million (about Rs.5,570 billion) from local bank accounts owned by Chinese company Xiaomi over alleged violations of foreign exchange laws, two sources told Reuters on Friday.

The Enforcement Directorate last week seized the bank assets of Xiaomi Technology India Private Limited and said it found the company had illegally transferred funds to three overseas companies, including a Xiaomi Group company, “under the guise of royalties”.

Xiaomi had denied any wrongdoing, saying its “royalty and statements to the bank are all legitimate and truthful.” She later appealed the decision of the Indian Financial Crimes Agency to the High Court of the southern state of Karnataka.

On Thursday, after hearing Xiaomi’s lawyers, a judge reversed the enforcement directorate’s decision, said the two sources, who declined to be identified because they were not authorized to speak to the media.

Xiaomi and the Enforcement Directorate did not immediately respond to requests for comment. The written court order is not yet public.

The relief was granted on condition that Xiaomi informs Indian authorities about money transfers such as royalties, one of the sources said.

The case will be heard on May 12, according to the Indian court’s website.

According to Counterpoint Research, Xiaomi was India’s top smartphone seller in 2021 with a 24 percent market share.

Reuters previously reported that Manu Kumar Jain, Xiaomi’s former head of India, was subpoenaed and questioned as part of the directorate’s investigation.

Many Chinese companies are struggling to do business in India due to political tensions following a border dispute in 2020. India has cited security concerns as it has since banned more than 300 Chinese apps, including popular ones like TikTok, and is also tightening norms for Chinese companies to invest in India.

© Thomson Reuters 2022




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