New Delhi, Aug 19 : Chinese smartphone maker Xiaomi on Friday stated that the ongoing investigation and accusations in India could require a lengthy amount of time to be resolved and the company could be awarded judgements or enter into “settlements which could adversely impact its cash flow”. The firm, which recorded around 20 percent decline in its worldwide sales of $10.31 billion in the June quarter (Q2) it declared it “it is not feasible to determine” the financial impact (of India probes) “at this point”.
“The management has analyzed the above-mentioned concerns pertaining to Xiaomi India, taking into the consideration the opinions of experts and concluded that Xiaomi India has valid grounds to communicate with the appropriate Indian authorities,” the group said in its financial statements for the quarter.
In April the Enforcement Directorate (ED) had announced that they had confiscated the amount of 5,551.27 million of Xiaomi India, lying in the bank accounts in accordance with the regulations of Foreign Exchange Management Act, in connection with the illegal outward remittances that were made by the firm.
Finance Minister Nirmala S.Sitharaman told the Rajya Sabha, in the recent Monsoon session that five cases of customs duty fraud had been filed against Xiaomi India by the Directorate of Revenue Intelligence (DRI).
The company reported in its quarter-end results that, since December 2021 Xiaomi India has been involved in various investigations and notifications made by appropriate Indian authorities, including the Income Tax Department, the Directorate of Revenue Intelligence and the Directorate of Enforcement “in relation to the compliance of the relevant Income tax laws, customs duties regulations, as and foreign exchange rules”.
Xiaomi India further received an order on the 11th of August “whereby certain of its bank deposits kept under restriction in the event that Xiaomi India has inappropriately deducted certain expenses and costs including the purchase cost of mobile phones as well as royalty fees that are paid to third parties and companies belonging to the Group”.
The government is investigating the cases of tax evasion allegedly committed from three Chinese mobile companies -three of them – OPPO, Vivo India and Xiaomi.
A show-cause notice requesting the sum of Rs 4,403.88 crore was sent to OPPO Mobiles India Ltd based on an investigation conducted by the DRI.
The DRI also discovered customs duty avoidance of approximately Rs 2,217 million by Vivo India.
For Chinese companies that originally attempted to create India an overseas processing centre for their products in the event that it proves becoming increasingly difficult and inefficient to run a business in the country, the decision to withdraw out of India is an alternative, the state-owned Global Times said earlier this month.
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