The ED issued the seizure order of approximately Rs 5,551 crore of assets held by Xioami under the FEMA on April 29, then forwarded it to the competent authority for confirmation, as required by the law that governs forex infractions in the country.
The Enforcement Directorate (ED) on Friday (September 30) said that the competent authority under the Foreign Exchange Management Act (FEMA) has authorised an order of seizure of approximately Rs 5,551 crore in deposits of Chinese mobile phone giant Xiaomi, the biggest sum frozen in India to date.
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The ED issued the seizure order under the FEMA on April 29 and then forwarded it to the competent authority for confirmation, as required under the legislation that governs foreign exchange infractions in the country.
The penalty was issued against Xiaomi Technology India Private Ltd under Section 37A of the FEMA, according to a statement from the federal agency. "This is the highest amount of seizure order in India which has been confirmed by the authority till date," the agency said.
"The authority, while confirming the seizure of Rs 5,551.27 crore, held that ED is right in holding that foreign exchange equivalent to Rs 5,551.27 crore has been transferred out of India by Xiaomi India in an unauthorised manner and is held outside India on behalf of the group entity in contravention of Section 4 of the FEMA," it added.
The competent authorities further stated that the payment of royalty is nothing more than a mechanism for transferring foreign exchange out of India, which is a "blatant violation" of FEMA requirements, ED said.
Xiaomi India is a wholly-owned subsidiary of the China-based Xiaomi Group and is a dealer and distributor of mobile phones in the nation under the brand name MI.