Xiaomi has lost 688 million euros due to illegal royalties
Authorities in India have seized EUR 688 million from gadget brand Xiaomi for allegedly making illegal payments to foreign entities. Xiaomi says it’s royalties, but India’s Enforcement Directorate disagrees.
Xiaomi India
It would be huge amounts, so India has decided to claim 688 million euros from Xiaomi India. It would be the initiative of Xiaomi China to make payments to three foreign entities. Remarkable, because according to the Enforcement Directorate, Xiaomi buys its gadgets, including its phones, from Indian manufacturers. There would be no reason at all to give money to those entities.
One of the companies would belong to the Xiaomi group and the other two would be in the United States, but the money would eventually end up with Xiaomi people again. India finds it suspicious and believes it is a violation of the Foreign Exchange Management Act, Section 4. Xiaomi disagrees and believes it acted legitimately and fairly. They are for intellectual property important to the company’s Indian products, Xiaomi said on Twitter.
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India vs China
Still, it is not quite digging its heels in the sand, but it is open to working with the authorities and clarifying any ambiguities. However, Xiaomi has been questioned about this before and a raid has been made on Xiaomi’s Indian headquarters.
However, that was not necessarily about this case, but about possible tax evasion in a series of raids on various Chinese gadget manufacturers. India has always had some problems with China due to conflicts between the two countries and this has grown exponentially since the coronavirus. For that reason, for example, the Chinese success story TikTok is not available in that country. It remains to be seen whether Xiaomi can negotiate with the Enforcement Directorate, but for the time being it seems that it has really lost that 688 million euros.
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