India’s federal financial crime agency has summoned a former Indian chief of Chinese company Xiaomi Corp as part of an investigation into whether the company’s business practices complied with Indian foreign exchange laws, two sources with direct knowledge told Reuters.
The Law Enforcement Branch has been investigating the company since at least February and in recent weeks has asked Manu Kumar Jain, Xiaomi’s former managing director for India, to appear before its executives, the sources said. .
Jain, now global vice president of Dubai-based Xiaomi, was currently in India, the sources said, although the purpose of his visit was unclear.
Asked about the investigation, a Xiaomi spokesperson said the company adheres to all Indian laws and is “fully compliant with all regulations”. “We are cooperating with the authorities in their ongoing investigation to ensure they have all the required information,” the statement said.
The actions signal scrutiny of the Chinese smartphone maker, whose Indian office was raided in December as part of a separate probe into alleged tax evasion. Some other Chinese smartphone markers were also attacked at the time.
Jain did not respond to a request for comment. India’s Law Enforcement Directorate has also not responded, although the agency generally does not make details public while investigations are ongoing.
The agency is reviewing existing business structures between Xiaomi India, its contractors and its parent entity in China, according to the first source, which said the flow of funds between Xiaomi India and its parent entity, including royalty payments , were being verified.
Application Management, via a February notice to Xiaomi’s Jain, requested various company documents, the second source familiar with the developments said.
These included details of foreign funding, shareholding and financing schemes, financial statements and information on key company executives, the source said.
Xiaomi remains India’s top smartphone vendor in 2021, with a 24% market share, according to Counterpoint Research. South Korea’s Samsung Electronics was the No. 2 brand with a 19% share.
Xiaomi also markets other tech gadgets in India including smartwatches and TVs.
(Reporting by Aditya Kalra and Munsif Vengatill in New Delhi; Editing by Bernadette Baum)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)