India’s crime-fighting company, the Enforcement Directorate, has issued a show-cause discover to Xiaomi’s India unit, its officers, and three banks as a part of an investigation into unlawful remittances made by the Chinese smartphone maker to international entities.

Under the Foreign Exchange Management Act (FEMA), the discover pertains to remittances totaling 55.51 billion Indian rupees ($673.2 million).

According to the Enforcement Directorate, Xiaomi engaged within the illegal switch of cash overseas since 2015, using deceptive data and disguising the funds as royalty funds. Last 12 months, the company froze Xiaomi’s belongings in India, alleging that the corporate had made unlawful remittances by falsely presenting them as royalty funds to international entities.

Xiaomi denies the allegations, countering that its royalty funds have been official and expressing its dedication to safeguarding its repute and pursuits.

The company contends that Xiaomi’s actions violate Section 4 of the Foreign Exchange Management Act, which imposes restrictions on the acquisition, possession, possession, or switch of international trade, international securities, or immovable property positioned outdoors India.

In April, an Indian courtroom rejected Xiaomi’s plea in opposition to the asset seizure, marking a big setback for the corporate, which is amongst India’s quickly rising smartphone manufacturers.

Xiaomi has made substantial investments in India, together with the institution of producing amenities and the launch of inexpensive smartphones concentrating on price-sensitive customers.

Chinese enterprises, significantly these in India, have confronted elevated scrutiny and regulatory challenges. Indian authorities have been vigilant in imposing monetary laws and investigating alleged violations, reminiscent of tax evasion, cash laundering, and breaches of international trade guidelines.

Tensions between India and China, stemming from a border battle, have additional difficult the operations of Chinese corporations in India since 2020.

Over 300 Chinese apps, together with common ones like TikTok, have been banned in India as a consequence of safety considerations. Chinese corporations like WeChat and Alibaba have additionally encountered scrutiny, restrictions, and compliance points associated to information privateness, nationwide safety, and native legal guidelines in recent times.