Xiaomi says will protect business interests following freezing of assets worth $682 million in India

Following an Indian order that froze Chinese smartphone maker Xiaomi Corp's assets worth $682 million, the company on Sunday said it was "disappointed" with it and would continue to protect its interests.

An Indian appellate authority on Friday had confirmed an April order by the Enforcement Directorate to seize Rs 55.51 billion, saying a probe found Xiaomi 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.

In a statement on Sunday, Xiaomi said that over 84 per cent of Rs 55.51 billion seized by the Enforcement Directorate earlier this year was the royalty payment made to US chipset company Qualcomm Group.

"We will continue to use all means to protect the reputation and interests of the company and our stakeholders," it said.

The company said that Xiaomi India is an affiliate and one of the Xiaomi Group companies, which entered into a legal agreement with Qualcomm to license IP for manufacturing smartphones. Both Xiaomi and Qualcomm believe that it is a legitimate commercial arrangement for Xiaomi India to pay Qualcomm royalty, the statement said.

With an 18 per cent 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. Ever since the border clashes in Galwan in 2020, many Chinese companies have struggled to do business in India.

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.

(With inputs from agencies)