The Enforcement Directorate (ED) has seized ₹5,551.27 crore from Chinese telecom firm Xiaomi Technology India Private Limited on charges of making illegal remittances which violated provisions of Foreign Exchange Management Act (FEMA),1999.

The seized amount was lying in bank accounts of the Xiaomi India, a wholly-owned subsidiary of China-based Xiaomi group, said officials of the investigating agency. The ED had initiated the investigation into the alleged illegal remittances made by the company in February, which was seven years after they started their operations in India.

Prior to this, the Income Tax department had also carried out searches on the premises of Xiaomi and other Chinese companies suspecting contravention of financial rules and laws.

"The Company has remitted foreign currency equivalent to ₹5,551.27 crore to three foreign based entities which include a Xiaomi group entity in the guise of royalty. Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities. The amount remitted to other two US-based unrelated entities were also for the ultimate benefit of the Xiaomi group entities, charged the ED.

Xiaomi India, which started remitting money from 2015, is a trader and distributor of mobile phones in India under the brand name of 'MI'. The company procures completely manufactured mobile sets and other products from the manufacturers in India and it has not availed of any service from the three foreign-based entities to whom such amounts have been transferred, alleged the ED.

"Under the cover of various unrelated documentary façade created amongst the group entities, the company remitted this amount in guise of royalty abroad which constitute violation of Section 4 of the FEMA," the ED accused in an official statement to media. The company also provided misleading information to the banks while remitting the money abroad, the agency added.

Earlier, the agency had summoned former vice-president of Xiaomi, Manu Kumar Jain to ascertain some financial documents.

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