Here's why Enforcement Directorate has summoned Xiaomi's Manu Kumar Jain
The Enforcement Directorate has summoned Manu Kumar Jain, former managing director of Xiaomi India, in connection with an investigation under the Foreign Exchange Management Act, according to Reuters. The agency, tasked with fighting financial crime, has been probing Xiaomi since February and has asked Jain to appear for investigation. Jain is currently serving as Global VP at Xiaomi and is based out of Dubai.
Why does this story matter?
Indian investigating agencies have been closely watching Chinese firms for a while. In some cases, they have taken action against them as well. It was only last December when the ED raided Xiaomi India's offices in the country. The current investigation is to ascertain whether the company has been adhering to FEMA regulations.
ED is looking into business structures and transactions of Xiaomi
The Enforcement Directorate is looking into business structures and transactions between Xiaomi India, its parent entity, and its contract manufacturers to determine if they were in consonance with FEMA rules. The probe had begun in February and the agency has summoned Jain in relation to the investigation. According to The Hindu, he was summoned twice before but failed to make an appearance.
We are fully compliant with all the regulations: Xiaomi
"Xiaomi is a law-abiding and responsible company. We give paramount importance to the laws of the land. We are fully compliant with all the regulations," a Xiaomi spokesperson said. "We are cooperating with authorities with their ongoing investigation to ensure that they have all the requisite information." Neither Jain nor the Enforcement Directorate have made any comments regarding the summons.
Findings of wrongdoing will invite a hefty penalty
The probe under FEMA pertains to foreign remittances of about Rs. 1,000 crore. If the current probe leads to findings of any wrongdoing by the company, it will invite a hefty monetary penalty. Apart from that, the case will also hamper the brand's business prospects in India. Xiaomi is currently India's top smartphone maker with a market share of 24%.
