The Enforcement Directorate (ED) has summoned a former India head of China’s Xiaomi Corporation in an investigation of whether the company’s business practices conformed with Indian foreign exchange laws, two sources with direct knowledge told Reuters.
The ED has been probing the company since at least February, and in recent weeks asked Manu Kumar Jain, Xiaomi’s former India managing director, to appear before its officers, the sources said.
Jain, now a global vice president at Xiaomi based out of Dubai, was currently in India, the sources said, though the purpose of his visit was not clear.
Asked about the probe, a Xiaomi spokesperson said the company abides by all Indian laws and was “fully compliant with all the regulations.”
“We are cooperating with authorities with their ongoing investigation to ensure they have all the requisite information,” the statement said.
The actions signal widening scrutiny of the Chinese smartphone maker, whose office in the country 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. The Enforcement Directorate also did not respond, though the agency typically does not make details public while investigations are ongoing.
The agency is looking into existing business structures between Xiaomi India, its contract manufacturers and its parent entity in China, according to the first source, who said that fund flows between Xiaomi India and its parent entity, including royalty payments, were being checked.
The Enforcement Directorate, via a notice in February addressed to Xiaomi’s Jain, asked for various company documents, the second source familiar with the developments said.
These included details of foreign funding, shareholding and funding patterns, financial statements and information of key executives running the business, the source said.
Xiaomi remains the country’s top smartphone seller in 2021, with a 24 percent market share, according to Counterpoint Research. South Korea’s Samsung Electronics was the No. 2 brand with a 19 percent share.
Xiaomi also deals in other tech gadgets in India, including smart watches and televisions.
© Thomson Reuters 2022
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