An ex-Xiaomi India chief summoned by the country’s agency for investigation

India’s federal financial-crime fighting agency has summoned an ex-Xiaomi India chief in an inquiry into whether the company’s business activities complied with Indian foreign currency rules, Reuters reported, citing sources familiar with the matter.

According to the report, the Enforcement Directorate has been investigating the Chinese smartphone giant since at least February and has recently summoned Manu Kumar Jain, Xiaomi’s former India managing director, to appear before its officials.

The Enforcement Directorate, via a notice in February addressed to Jain, who now is a global vice president of Xiaomi, asked for various company documents, said the report.

When asked about the probe, a Xiaomi representative responded to Reuters that the company abides by all Indian laws and is “completely compliance with all the regulations.”

“We are cooperating with authorities with their ongoing investigation to ensure they have all the requisite information,” the statement said.

The actions mark a broadening of scrutiny of the Xiaomi. On December 31, Economic Times reported that Indian tax department raided Xiaomi and another Chinese smartphone maker Oppo, because these two Chinese smartphone manufacturers were deemed to have violated the law pertaining to non-disclosure of related party transactions. The department was also probing the two companies for alleged bogus borrowings of over 50 billion rupees. 

In January, India authorities asked the local unit of Xiaomi to pay 6.53 billion rupees in import taxes after an investigation found that it had evaded some duties.

India is Xiaomi’s biggest market outside of China. In March 2021, the Beijing-based hardware company told news outlet Mint that it will invest 1 billion rupees in India over the next two years, aimed at doubling its retail reach in the country and create more than 10,000 new jobs. 

As geopolitical risks rise, Chinese companies may face increasing challenges in India. In the past year, citing national security concerns, India banned hundreds of Chinese apps, including ByteDance’s TikTok, Tencent’s WeChat, and Alibaba’s UC Browser.

According to Counterpoint Research, Xiaomi remains the largest smartphone seller in India with a market share of 24% in 2021, followed by Samsung with a 19% share.