The Enforcement Directorate (ED) has summoned the former India head of China’s Xiaomi Corporation to investigate whether the company’s business practices comply with India’s foreign exchange rules, two sources with specific information told Reuters.
The ED has been investigating the company since at least February, and in recent weeks has asked Manu Kumar Jain, Xiaomi’s former managing director of India, to appear before its officials, sources said.
Jain, now Xiaomi-based vice-president of Xiaomi, is currently in India, sources said, although the purpose of his visit was not immediately clear.
Asked about the investigation, an Xiaomi spokesman said the company complies with all Indian laws and “fully complies with all regulations.”
“We are cooperating with the authorities in their ongoing investigation to ensure that they have all the necessary information,” the statement said.
The move marks an increase in tests by a Chinese smartphone maker, whose office in the country was attacked in December in a separate investigation into allegations of tax evasion. Some Chinese smartphone tags were also attacked at the time.
Jain did not respond to a request for comment. The Enforcement Directorate also did not respond, although the agency usually did not disclose the information publicly while the investigation was ongoing.
The agency is looking at existing business structures between Xiaomi India, its contractors and its parent organization in China, according to an original source, who said the flow of funds between Xiaomi India and its parent organization, including royalties, is being considered.
The Enforcement Directorate, in a February notice to Xiaomi’s Jain, requested various company documents, a second source said.
This includes details of foreign funding, stocks and funding mechanisms, financial statements and information of key executives conducting business, the source said.
Xiaomi remains the world’s leading retailer by 2021, with a market share of 24 percent, according to Counterpoint Research. South Korea’s Samsung Electronics was the 2nd brand with a 19 percent share.
Xiaomi also operates on other technology gadgets in India, including smart watches and televisions.
