Xiaomi India says royalty payments for IPs are legit after ED seizes Rs. 5,551 crore under FEMA

India’s Enforcement Directorate (ED) today announced that it has seized Rs.5551.27 Crore worth from Xiaomi India’s bank accounts over Foreign Exchange Management Act (FEMA) in connection with the illegal outward remittances made by the company.

The ED said that the amount remitted to other two US-based unrelated entities were also for the ultimate benefit of the Xiaomi group entities.

“Under the cover of various unrelated documentary facade created amongst the group entities, the company remitted this amount in guise of royalty abroad which constitute violation of section 4 of the FEMA,” it added.

This comes after the ED questioned Xiaomi’s global vice president, Manu Kumar Jain, at its regional office in Bengaluru earlier this month.

However, Xiaomi has denied this in a statement, saying that the royalty payments are all legit and are made for in-licensed technologies and IPs used in its Indian version products. The company said that it is working with the government to clarify any misunderstandings.

In a statement, Xiaomi said:

As a brand committed to India, all our operations are firmly compliant with local laws and regulations

We have studied the order from government authorities carefully. We believe our royalty payments and statements to the bank are all legit and truthful. These royalty payments that Xiaomi India made were for the in-licensed technologies and IPs used in our Indian version products. It is a legitimate commercial arrangement for Xiaomi India to make such royalty payments. However, we are committed to working closely with government authorities to clarify any misunderstandings.


Author: Srivatsan Sridhar

Srivatsan Sridhar is a Mobile Technology Enthusiast who is passionate about Mobile phones and Mobile apps. He uses the phones he reviews as his main phone. You can follow him on Twitter and Instagram