The Enforcement Directorate (ED) has issued a notice to Xiaomi India and three banks for alleged violations of foreign exchange regulations under the FEMA Act. This regulatory action, mentioned in a Medianama article that also covers related cases involving other tech companies, highlights increasing scrutiny of cross-border transaction compliance in India.

Xiaomi India, under significant scrutiny due to strained India-China relations, has formally requested that the Indian government revise policies affecting Chinese businesses. The company is advocating for reduced import tariffs on smartphone components and manufacturing incentives as part of a broader effort to ease regulatory pressures.

On February 6, 2024, Xiaomi India sent a protest letter to the Indian government urging for policy changes including reduced import tariffs and manufacturing incentives. The company argued that heightened scrutiny of Chinese firms is deterring component suppliers from investing in India.

The Enforcement Directorate reportedly seized Rs.5551.27 Crore from Xiaomi India over allegations of breaching foreign exchange laws. The action concerns claims that the company remitted substantial funds overseas as royalty payments – a process allegedly directed by its Chinese parent group. Xiaomi India has countered, stating that the payments were legitimate commercial transactions related to licensed technology.