NEW DELHI: India’s federal financial-crime fighting agency has summoned a former India chief of China’s Xiaomi Corp to investigate whether the company’s business practices are in line with Indian foreign exchange laws, two with direct knowledge said. sources told Reuters.
Sources said the Enforcement Directorate has been investigating the company since at least February, and in recent weeks has asked Xiaomi’s former India managing director Manu Kumar Jain to appear before its executives.
Sources said Jain, who is now the global vice president of Dubai-based Xiaomi, was currently in India, though the purpose of his visit was unclear.
When asked about the investigation, a Xiaomi spokesperson said that the company complies with all Indian laws and is “fully compliant with all regulations.”
“We are cooperating with the authorities in their ongoing investigation to ensure they have all the necessary information,” the statement said.
The actions prompt a broader investigation into the Chinese smartphone maker, whose India office was raided in December in a separate investigation over alleged income tax evasion. Some other Chinese smartphone markers were also raided at the time.
Jain did not respond to a request for comment. India’s Enforcement Directorate also did not respond, although the agency usually does not make details public while the investigation continues.
The agency is looking into existing business structures between Xiaomi India, its contract makers, and its parent entity in China, according to an earlier source, who said it is examining fund flows between Xiaomi India and its parent entity, including royalty payments. Was.
The Enforcement Directorate through a notice addressed to Xiaomi’s Jain in February asked for various documents from the company, another source familiar with the developments said.
These include foreign funding, shareholding and funding patterns, financial statements and details of key executives running the business, the source said.
According to Counterpoint Research, Xiaomi remains India’s top smartphone seller in 2021 with a 24% market share. South Korea’s Samsung Electronics was the No. 2 brand with a 19% share.
Xiaomi also deals in other tech gadgets in India including smart watches and televisions.
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