ED issues showcause notices to Chinese phone-maker Xiaomi India's top officials and 3 banks for FEMA violations

The central probe agency issued the notices to Xiaomi Technology India’s CFO Sameer Rao and former MD Manu Jain under FEMA.

"The Adjudicating Authority has issued SCN to Xiaomi Technology India Private Limited, its officials and 3 banks under FEMA on the basis of a complaint filed by the ED with respect to illegal remittances made by the company to the tune of Rs 5,551.27 crore," said ED in a statement.

The ED also served notices to three banks—CITI Bank, HSBC Bank and Deutsche Bank AG—for the alleged violations, reported Moneycontrol citing sources.

Earlier, ED had confiscated funds amounting to Rs 5,551.27 crore worth of Xiaomi Technology India Private Limited deposited in its bank accounts under the FEMA for "unauthorised" remittance of this amount in the guise of royalty abroad.

"The authority while confirming the seizure held that ED is right in holding that foreign exchange equivalent to Rs 5,551.27 crore has been transferred out of India by Xiaomi India in an unauthorised manner and is held outside India on behalf of the group entity in contravention of section 4 of FEMA, 1999 and the same is liable to be seized in terms of provisions of Section 37A of the FEMA," it said.

After the Enforcement Directorate (ED) investigation is concluded under the Foreign Exchange Management Act (FEMA), a show-cause notice is issued, and upon resolution, the accused is obligated to pay a penalty.

In April 2023, the Karnataka High Court dismissed Xiaomi India's petition contesting an order issued by the Competent Authority designated under the Foreign Exchange Management Act, 1999 (FEMA).