…Researched and contributed by Henry George.
The Karnataka High Court has denied a petition by Chinese tech giant Xiaomi challenging the seizure of $676.35 million (roughly Rs. 5,500 crore) by India’s Enforcement Directorate.
The agency had frozen Xiaomi’s assets, accusing the company of making illegal remittances to foreign entities under the guise of royalty payments.
The court has demanded bank guarantees for the frozen assets, a requirement that Xiaomi claims is too difficult to meet.
Background on Xiaomi’s Legal Battle
In 2020, India’s federal financial crime agency froze Xiaomi’s assets, claiming that the company had made illegal remittances to foreign entities under the guise of royalty payments.
The company has denied these allegations. Xiaomi and Samsung are leading market competitors in India’s smartphone market, the second largest in the world after China, with each having an 18 percent share.
Last year, Xiaomi’s lawyer Udaya Holla had asked the court to lift the freeze, but the judge had ruled that the company must first provide bank guarantees covering the $676 million in assets that are frozen.
Holla had argued that such bank guarantees would be difficult to obtain and would make it difficult for the company to function and pay salaries and make inventory purchases ahead of the Hindu festival of Diwali.
Xiaomi Denies Allegations
Xiaomi has repeatedly denied any wrongdoing, maintaining that its royalty payments were all legitimate and truthful.
The company has vowed to “continue to use all means to protect the reputation and interests” of its business.
The court’s ruling and the ongoing legal battle have highlighted the challenges faced by Chinese companies in doing business in India amid ongoing political tensions following a border clash in 2020.