China asks India to conduct lawful investigations after Xiaomi allegations

Xiaomi, in a court filing, claimed that its officials were threatened with consequences if they did not submit compliant statements, allegations that the ED has rejected

Chinese Foreign Ministry spokesman Zhao Lijian. File | Photo Credit: Reuters

China’s government on Monday asked India to carry out investigations “in accordance with laws”, following claims of coercion from smartphone maker Xiaomi during ongoing investigations into its financial practices.

India’s Enforcement Directorate (ED) on Saturday said claims of Xiaomi India’s officials that their statements were taken “under coercion” were “untrue and baseless”. It noted it had recorded statements from Manu Kumar Jain, former head of Xiaomi India and current Global VP, as well as Chief Financial Officer Sameer Rao.

The ED said the last statement from them was recorded on April 26 while the order to seize the company’s assets was passed three days later. “No complaint was filed by them at any point of time during recording of statements at various occasions,” the agency said, adding that “it appears that allegation now made after passage of substantial time is an afterthought.”

The Karnataka High Court on Saturday stayed the April 29 order, under which ₹5,551.27 crore was seized under the Foreign Exchange Management Act, the Press Trust of India reported.

In its first comments on the developments, China’s Foreign Ministry on Monday said it was “closely monitoring the matter.”

“The Chinese government always asks Chinese companies overseas to operate in accordance with laws and regulations,” spokesperson Zhao Lijian said. “In the meantime, we firmly support Chinese companies in protecting their lawful rights and interests. We hope the Indian side can provide a fair, just and non-discriminatory business environment for Chinese companies making investment and operating in the country, and conduct investigation and law enforcement in accordance with laws and regulations so as to beef up the international community’s confidence in investment.”

Xiaomi India, in a court filing, claimed that its officials were threatened with consequences if they did not submit compliant statements, allegations that the ED has rejected.

The company’s operations in India have been under investigation over remittance payments which authorities said were illegal. Xiaomi, however, has maintained the payments were royalties. A hearing in the case is set for later this week.