According to two people with direct information, India's federal financial-crime fighting agency has summoned a former India head of China's Xiaomi Corp (1810.HK) in a probe into whether the company's business activities complied with Indian foreign exchange rules.
According to the sources, the Enforcement Directorate has been investigating Xiaomi since at least February and has recently summoned Manu Kumar Jain, Xiaomi's former India managing director, to appear before its officers.
According to the sources, Jain, who is now a global vice president at Xiaomi based in Dubai, is now in India, albeit the reason of his travel is unknown.
When asked about the investigation, a Xiaomi representative stated the business follows all Indian rules and is "completely compliance with all regulations."
"We are assisting authorities with their ongoing investigation to ensure they have all necessary information," according to the statement.
The steps indicate that the Chinese smartphone maker is being scrutinized more closely, as its India office was raided in December as part of a separate probe into possible income tax cheating. At the time, other Chinese smartphone manufacturers were also raided.
A request for comment from Jain was not returned. The Enforcement Directorate of India likewise did not comment, despite the fact that the agency does not usually make details of current investigations public.
According to the first source, the agency is looking at existing business structures between Xiaomi India, its contract manufacturers, and its parent entity in China. Fund flows between Xiaomi India and its parent entity, including royalty payments, are being investigated.
The Enforcement Directorate requested numerous firm documents from Xiaomi's Jain in February, according to a second source familiar with the situation.
According to the source, they included information on foreign finance, shareholding and funding patterns, financial statements, and information on the company's top executives.
According to Counterpoint Research, Xiaomi will continue to be India's top smartphone seller in 2021, with a 24 percent market share. Samsung Electronics (005930.KS) of South Korea came in second with a 19 percent market share.
Other digital items, such as smart watches and televisions, are also sold by Xiaomi in India.