ED slaps FEMA summons on Xiaomi global VP

New Delhi: The Enforcement Directorate (ED) has summoned the global vice president of Chinese mobile manufacturing company Xiaomi, Manu Kumar Jain, for questioning in a probe linked to alleged contravention of the foreign exchange law, officials said on Wednesday.

The federal probe agency, according to sources, is investigating the company and its executives under the provisions of the Foreign Exchange Management Act (FEMA) linked to foreign remittances worth crores made over the last few years. Jain, the former India head of Xiaomi, has been asked to furnish a number of financial documents linked to the company by appearing in person on Wednesday or by sending it through an authorised representative.

Documents related to Xiaomi's shareholding, source of funds, vendor contracts, and payments made to Indian management and sent abroad have been sought by the ED regional office located in Bengaluru from Jain, who supervised its operations in India till recently, they said.

A Xiaomi spokesperson said they were "a law abiding and responsible company", when asked about the ED notice to Jain. "We give paramount importance to the laws of the land. We are fully compliant with all the regulations and are confident of the same."

"We are cooperating with authorities with their ongoing investigation to ensure they have all the requisite information," the spokesperson said. Proceedings under the FEMA are civil in nature and the final penalty, post adjudication, can be at least three times the amount contravened under the law. Premises of Xiaomi and a few other Chinese mobile manufacturing companies were raided across the country by the Income Tax Department in December last year on charges of tax evasion.

The government has also banned some smartphone applications owned by Xiaomi on security grounds. Xiaomi has been leading since last several quarters the Indian smartphone market. Despite a dip in smartphone shipments in India, the company secured 22 per cent market share in the fourth quarter of 2021 and maintained its lead.