ED has seized Rs.5551.27 Crore or $725 million of Xiaomi Technology India Private Limited. The Enforcement Directorate seized the amount on the grounds of the illegal outward remittances made by the company.
Xiaomi released a statement claiming that it adheres to the local laws and authority. The company’s image could take a huge setback if it is unable to prove that this is only a misunderstanding. Meanwhile, the seized money remains inaccessible until the probe completes.
Why did ED seize $725 million from Xiaomi?
In the above-mentioned tweet, ED mentions that the company indulged in Forex Violations by giving out illegal outwards remittances. In layman’s terms, the company diverted huge sums of money out of the country to other parties as royalty.
The finance regulatory body is conducting investigations on Xiaomi and other Chinese firms for illegal trade practices and violations. But seizing their assets has caused quite a stir on social media.
Xiaomi also took to Twitter to issue a public statement about the asset seizure by ED. In a long statement, Xiaomi responded about the seizure and its comfort to its audience. It said that the brand complied with all the local laws and regulations. Rather than shifting the blame, it only stated relevant information in the image shared on Twitter.
It added that it carefully studied the order issued by government authorities carefully. The brand claimed that all the remittances were legit and truthful and there wasn’t anything covert about it. Furthermore, Xiaomi clarified that the remittances paid were for the IPs used in the Indian version of Xiaomi products.
It is a legitimate agreement for Xiaomi India to make these payments. Moreover, the brand added that they would work closely with the government authorities to sort out any misunderstandings.
How did social media react to the news?
Twitter users largely mocked the news and felt delighted that the company was under investigation. Some even expressed gratitude to the ED for seizing Xiaomi’s assets. But it is important to understand that it is not a puny seizure of assets.
If the ED proves that the remittances were illegal, the company could end up paying more than just the money. Xiaomi has a firm grasp on the Indian smartphone market and this incident would gravely hurt the brand image. Furthermore, the sales could plummet and other brands could capture its market.
Xiaomi recently launched the 12 Pro smartphone. What are your thoughts on this recent development? Would the brand be able to recover from it? Share your thoughts in the comment section.