Xiaomi under ED Scrutiny regarding Compliance with Foreign Exchange Laws

Xiaomi Corp. India (‘Xiaomi’), a Chinese smartphone maker, is under investigation, with its global vice president called in for questioning by the Enforcement Directorate (‘ED’), regarding compliance with foreign exchange laws. ED is investigating the business structure of Xiaomi with its contract manufacturers and parent entity in China. Further, the fund flows, including royalty payments, between Xiaomi and its parent entity is also under scrutiny. This is not the first time that Xiaomi is under the radar of the Indian authorities as, in December 2021, the company was raided in a separate investigation by the Income tax department for alleged income tax evasion.