According to a report by Reuters, India’s federal financial-crime fighting agency has summoned a former India head of China’s Xiaomi Corp in a probe into whether the company’s business activities complied with Indian foreign exchange rules.
Two people familiar with the matter told Reuters, that the Enforcement Directorate has been investigating Xiaomi since at least February and has recently summoned Manu Kumar Jain, Xiaomi’s former India managing director, to appear before its officers.
According to the sources, Jain, who is now a global vice president at Xiaomi based in Dubai, is now in India, albeit the reason for his travel is unknown. When asked about the investigation, a Xiaomi representative stated the business follows all Indian rules and is “completely compliance with all regulations,” as per Reuters.
“We are cooperating with authorities with their ongoing investigation to ensure they have all the requisite information,” the statement said.
The steps indicate that the Chinese smartphone maker is being scrutinised more closely, as its India office was raided in December as part of a separate probe into possible income tax cheating. At the time, other Chinese smartphone manufacturers were also raided.
According to the first source, the agency is looking at existing business structures between Xiaomi India, its contract manufacturers, and its parent entity in China. Fund flows between Xiaomi India and its parent entity, including royalty payments, are being investigated.
The Enforcement Directorate requested numerous firm documents from Xiaomi’s Jain in February, according to a second source familiar with the situation. According to the source, they included information on foreign finance, shareholding and funding patterns, financial statements, and information on the company’s top executives.
According to Counterpoint Research, Xiaomi will continue to be India’s top smartphone seller in 2021, with a 24 percent market share. Samsung Electronics of South Korea came in second with a 19 percent market share. Other digital items, such as ssmartwatchesand televisions, are also sold by Xiaomi in India.
