Caixin
May 13, 2022 05:55 AM
TECH

Xiaomi’s Indian Unit Cleared for Operating Funds Until May 23

What’s new: A court in India issued an order Thursday allowing Chinese mobile phone maker Xiaomi Corp.’s unit in India to make certain payments through its local bank accounts until May 23.

India’s anti-money-laundering agency seized $725 million from Xiaomi’s bank accounts, citing investigations of allegedly illegal fund transfers. After Xiaomi sued the Indian government, the Karnataka High Court unfroze the accounts and cleared Xiaomi to make payments for daily operations through May 12. The new court order extended that.

Xiaomi can get access to its accounts only to pay for daily operating expenditures and can’t use the accounts to make royalty payments, the court ordered.

India’s Enforcement Directorate accused the smartphone maker of illegally sending money abroad as royalty payments to three entities with ties to its parent, from which the directorate said it never received any services.

At a court hearing Thursday, Xiaomi’s lawyers argued that the company was being targeted for being Chinese because other smartphone sellers have paid royalties to the same entity for the past 12 years with no legal action against them.

The royalty payment matter requires further hearing and checking on more bank transfer records, Judge Siddappa Sunil Dutt Yadav said. The next hearing was set for May 23.

The background: India has taken a hard line against Chinese companies operating in the country ever since Indian and Chinese troops clashed in 2020.

India blacklisted more than 200 mobile applications from Chinese providers, including shopping services from Alibaba Group Holding Ltd., the hit TikTok short video platform from ByteDance Ltd. and apps used on Xiaomi’s phones.

Xiaomi also faces tax investigations in India. The company’s Indian offices and manufacturing units were raided in December in a separate investigation over alleged income tax evasion. In January, India’s Revenue Intelligence wing told Xiaomi to pay $84.5 million for allegedly evading some import taxes.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)

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