Monday, May 16, 2022
HomeBusinessFormer India head of Xiaomi, Manu Kumar Jain summoned by ED in...

Former India head of Xiaomi, Manu Kumar Jain summoned by ED in FEMA Case, in a huge amount of Rs.3000 crores.

Chinese company Xiaomi’s, former India head and now global vice president, Manu Kumar Jain, on 13 April 2022, was summoned by ED in a case related to Foreign Exchange Management Act case.

Jain was asked to appear before an investigating officer in Bengaluru and was questioned there.

The federal probing agency is investigating the company and its officials under the provisions of FEMA related to foreign remittances worth crores of rupees made over the last few years.

According to sources, the case is related to foreign remittances made by the company to China through a third country in violation of RBI guidelines. “It was around three years ago, that the company made remittances to tune the over Rs.3000 crore in violation of the Foreign Exchange Management Act (FEMA). By the stated facts, a case has been registered and the company is being investigated”, quoted an ED official.

ED found out that Xiaomi had not complied with the regulatory mandate for disclosure of transactions with associated enterprises; this lapse of non-disclosure makes it liable to them for action.

Although they have been introduced in the books of the Indian company, the sources from which the funds have been received are doubtful as there was no creditworthiness of the lender.

When this was happening, Manoj Kumar Jain was the head of Xiaomi India back then. When he appeared before ED, he was asked to furnish various financial documents for investigating purposes, viz., documents related to Xiaomi’s shareholding, sources of funds, vendor contracts, and payments made to Indian management and sent abroad.

As quoted by the PTI report, Xiaomi’s spokesperson said that “We give paramount importance to the laws of the land. We are fully compliant with all the regulations and are confident of the same. We are cooperating with the authorities in their ongoing investigation to ensure that they have all the requisite information. We are a very law-abiding and responsible company”.

Proceedings under FEMA are civil in nature. The final penalty will be at least three times the amount contravened under the law post-adjudication.

In January 2022, Xiaomi was also investigated by the Directorate of Revenue Intelligence (DRI) for evading customs duty through undervaluation. DRI had issued three show-cause notices to the company for demand and recovery of customs duty, which amounted to Rs.653 crores between 1 April 2017 and 30 June 2020. During the investigations, the premises of Xiaomi was searched. Under the contractual obligation, it recovered incriminating documents indicating that the company was remitting royalty and license fees to Qualcomm USA and Beijing Xiaomi Mobile Software Co. Ltd.

After the investigation and searching, one of the directors of Xiaomi India confirmed those payments.

Other Chinese companies were searched by Income Tax Department.

After I-T raids at smartphone companies Chinese groups say probes shake  confidence while Global Times criticize India's business environmentAmid rising tensions with neighbouring country China, the search and probe into Xiaomi was another step taken by India.

In December, not only Xiaomi was probed, but other Chinese companies like Oppo and OnePlus were also subjected to probes by Indian authorities on the charges of tax evasion. The searches were conducted in these companies’ premises located over various places in India, including Karnataka, Tamil Nadu, Assam, West Bengal, Andhra Pradesh, Madhya Pradesh, Gujarat, Maharashtra, Bihar, Rajasthan, and Delhi NCR.  

The government has also banned some smartphone applications made by Xiaomi for security purposes.

About Xiaomi.

Xiaomi logo and symbol, meaning, history, PNGXiaomi is the leading smartphone seller company in India. It also sells and deals with other tech gadgets like speakers and smartwatches, and recently added to its bucket is television.

Despite the dip in smartphone sales during covid, Xiaomi retained its position as India’s top-selling smartphone company in 2021. It secured a 22% market share in the fourth quarter of 2021 and did maintain the image of a market leader.

Edited by Prakriti Arora

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

Recent Comments

%d bloggers like this: