India seeks to restore block on $725 mn of Xiaomi's bank assets: Report

ED was questioning Xiaomi for alleged violation of foreign exchange laws

FPJ Web DeskUpdated: Thursday, May 12, 2022, 01:01 PM IST
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The ED's crackdown on Xiaomi is under the Foreign Exchange Management Act (FEMA) in connection with illegal remittances made by the firm in February this year. /Representational Image |

The Enforcement Directorate asked a court on Thursday to re-instate a freeze on $725 million in the Indian bank accounts of Xiaomi Corp as it investigates fund transfers by the Chinese smartphone giant, Reuters said.

The ED seized Rs 5,551.27 crore of Xiaomi India, under the provisions of Foreign Exchange Management Act (FEMA). The amount was seized from four bank accounts of Xiaomi with HSBC, Citibank, IDBI and Deutsche Bank.

The ED had seized the money saying Xiaomi had illegally transferred funds abroad to three entities, including one in the Xiaomi group, describing them as payments "in the guise of royalty".

But the high court in Karnataka put that decision on hold after Xiaomi challenged it, saying all the royalty payments were legitimate, the report said.

Xiaomi's lawyers told the court that banks were not allowing the company to make necessary payments, even though the court had allowed it to use funds for purposes other than royalty payments, the report said.

On Thursday, the judge allowed Xiaomi to use a bank overdraft facility for such payments.

(With inputs from Reuters)

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