In a recent development, the enforcement department conducted searches across more than 40 locations of Chinese mobile manufacturers including Vivo and other firms, about the violation of the Prevention of Money Laundering Act (PMLA), according to multiple news reports.
The searches are being conducted across several locations in Uttar Pradesh, Madhya Pradesh, Bihar, and some locations in the south.
The development comes months after the government watchdog seized Rs 5,551.27 crore from Xiaomi, one of the leading Chinese mobile companies in India citing, “illegal outward remittances made by the company.”
Notably, the income tax department had conducted searches in multiple locations of Vivo and other Chinese firms last year, citing that revenue worth Rs 500 crore was not properly disclosed.
In the past few months, the Chinese smartphone companies have been on the Indian government’s radar IT ministry, Ministry of Home Affairs, and Ministry of Corporate Affairs over non-compliance with PMLA.
The federal agency filed a money laundering case after taking cognizance of a recent Delhi Police (economic offenses wing) FIR against a distributor of the agency based in Jammu and Kashmir where it was alleged that a few Chinese shareholders in that company forged their identifying documents.
The action is being seen as part of the Union government’s continued crackdown against Chinese entities and their linked Indian operatives indulging in serious financial crimes like money laundering and tax evasion while operating here.
Earlier Incident
In April, the ED had said they seized Rs 5,551.27 crore of Xiaomi Technology India Private Limited lying in the bank accounts under the provisions of the Foreign Exchange Management Act in connection with the illegal outward remittances made by the company.
The company released a statement saying, “We have studied the order from the government authorities carefully. We believe our royalty payments and statements to the bank are all legit and truthful.
These royalty payments that Xiaomi India made were for the in-licensed technologies and IPs used in our Indian version products. It is a legitimate commercial arrangement for Xiaomi India to make such royalty payments. However, we are committed to working closely with government authorities to clarify any misunderstandings.”
On March 3, the Income Tax Department said that they conducted raids against the Chinese firms dealing in telecom products and learned that the companies were involved in tax evasion through fake receipts.
The I-T department had detected suppression of income of 400 crores at that time.
China Reaction
“China is closely following the situation. The Chinese government always asks Chinese companies to abide by laws and regulations while doing business overseas,” Chinese foreign ministry spokesperson Zhao Lijian said last month.
“We hope India will provide a fair, just, and non-discriminatory business environment for Chinese companies, conduct investigation, and law enforcement by laws and regulations to increase the confidence of global investors,” he added.
