Court docket declines reduction to Xiaomi over $676 mn asset freeze

An Indian courtroom on Thursday declined to elevate a freeze on Xiaomi Corp’s $676 million value of property, even because the Chinese language smartphone group stated this enforcement motion had “successfully halted” its operations in its key Indian market.

India’s federal monetary crime company, the Enforcement Directorate, froze 55.51 billion rupees of Xiaomi property in April, alleging the corporate made unlawful remittances to international entities by passing them off as royalty funds. Final week, an appellate physique confirmed the seizure.

Xiaomi, which denies any wrongdoing, challenged the asset freeze within the Excessive Court docket of southern Karnataka state, saying in its authorized submitting it “is severely disproportionate and has successfully halted the operations” of the corporate.

Xiaomi and Samsung are market leaders in India’s smartphone market, the world’s second largest after China, based mostly on knowledge from Counterpoint, with an 18% share every.

On Thursday, Xiaomi’s lawyer Udaya Holla sought to finish the freeze by in search of reduction from the decide, however the courtroom stated the corporate should first present financial institution ensures masking the $676 million in property which might be frozen.

Holla advised the courtroom such financial institution ensures would imply depositing all the quantity, making it tough for the corporate to perform and pay salaries and make stock purchases forward of Hindu pageant of Diwali – when shopper gross sales growth in India.

The decide declined any rapid reduction, and adjourned the case till Oct. 14.

Nargund M B, one among India’s Extra Solicitor Generals, who was representing the Enforcement Directorate, urged the courtroom to not grant any rapid reduction to Xiaomi, and likewise requested for the financial institution ensures.

Xiaomi didn’t instantly reply to a request for remark.

Xiaomi has beforehand stated its royalty funds have been all respectable and truthful, including it’ll “proceed to make use of all means to guard the status and pursuits.”

Many Chinese language corporations have struggled to do enterprise in India attributable to political tensions following a border conflict in 2020. India has cited safety considerations in banning greater than 300 Chinese language apps since then, together with well-liked ones resembling TikTok, and likewise tightened guidelines for Chinese language corporations investing in India.