New Delhi: An Indian appellate authority has confirmed a seizure order against Chinese smartphone maker Xiaomi Corp. that froze $682 million in an investigation related to illegal remittances to foreign entities, authorities said on Friday.

The Enforcement Directorate had seized Rs 5,551 crore in April, saying a probe found the company had made illegal remittances to foreign entities by passing them off as royalty payments.

"Under the cover of various unrelated documentary facade created amongst the group entities, the company remitted this amount in guise of royalty abroad," which violated India's foreign exchange laws, the agency said on Friday, September 30.

The decision was "the highest amount of seizure order in India which has been confirmed by the authority", it added.

Xiaomi did not immediately respond to a request for comment on the ruling by the body known as the Competent Authority under the country's foreign exchange laws.

The company has denied wrongdoing. It previously said it complies with Indian laws and believed its "royalty payments and statements to the bank are all legit and truthful," adding that it is "committed to working closely with government authorities to clarify any misunderstandings".

Xiaomi had challenged the agency's decision in an Indian court, which redirected the matter to the appellate authority's review.

With an 18% share each, Xiaomi and Samsung together lead the smartphone market in India, the world's second biggest after China, according to data from Counterpoint Research.

Many Chinese companies have struggled to do business in India due to political tensions following a border clash in 2020. India has cited security concerns in banning more than 300 Chinese apps since then, including popular ones such TikTok, and also tightened rules for Chinese companies investing in India.

(Reuters)

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