Despite the fact that this enforcement action had "effectively halted" its operations in its key Indian market, an Indian court on Thursday declined to lift a freeze on Xiaomi''s $676 million (nearly Rs. 5,500 crore) worth of assets.
The federal financial crime agency (ED) in India frozen Rs. 5,551 crore of Xiaomi assets in April, alleging it made unlawful remittances to foreign governments by sending them off as royalty payments. Last week, an appellate committee confirmed the seizure.
Xiaomi, which denies any wrongdoing, challenged the asset freeze in the High Court of Southern Karnataka state, declaring, in its legal complaint, that it "is severed inadequate and has effectively halted the operations."
According to Counterpoint, Xiaomi and Samsung are among India''s most popular smartphone brands, the world''s second largest following China.
On Thursday, Xiaomi''s lawyer, Udaya Holla, sought relief from the judge, but the court found the company must first provide bank guarantees covering the $676 million in assets that have been frozen.
When India''s consumer sales boom, Holla told the court that bank guarantees would include deposited the whole amount, making it difficult for the company to function and pay salaries and inventory purchases.
The judge refused to make a claim for immediate relief, and the case has been postponed until October 14.
Nargund M B, a member of India''s Additional Solicitor Generals, was a member of the Enforcement Directorate, and the court urged him not to grant Xiaomi any immediate relief, as well as demanding bank guarantees.
Xiaomi did not respond to a request for clarification immediately.
Xiaomi previously stated that its royalty payments were all fair and accurate, adding that it will "continue to use all possible means to protect the reputation and interests."
Following a border famine in 2020, many Chinese companies have struggled to do business in India. India has cited security concerns in banning more than 300 Chinese applications since then, including popular ones such as TikTok, and increased restrictions for Chinese companies investing in India.
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