Xiaomi India fined Rs. 653 crores by Finance Ministry, company responds

Xiaomi has been fined ₹653 crores by the Finance Ministry for evading import duty.

Xiaomi India has been found evading import duty by the Ministry of Finance. (HT Photo)

The Ministry of Finance has announced a fine of ₹653 crores on Xiaomi's India unit Xiaomi Technology India for evading import duty. A previous report had suggested that both Xiaomi and Oppo have attracted fines of up to ₹1,000 crores for evading taxes. Now, the Union Ministry has made it official.

It is said that the government issued show-cause notices under the provisions of the Customs Act, 1962. This was after searches were conducted at the company's premises across the country that indicated remittance of royalty and license fee to US and Chinese firms under contractual obligations.

UPDATE: Xiaomi India spokesperson has shared a media statement with regards to the development. “At Xiaomi India, we give utmost importance to ensuring we comply with all Indian laws. We are currently reviewing the notice in detail. As a responsible company, we will support the authorities with all necessary documentation.”

An investigation was put in place by the Directorate of Revenue Intelligence after it had received inputs about Xiaomi India evading customs duty. Xiaomi India is yet to issue a media statement on this regard.

Xiaomi India fined ₹653 crores for tax invasion

The investigation also raised questions on the method of Xiaomi India's sales methods in the country. It was found that phones were manufactured entirely by contract manufacturers and then sold to Xiaomi India – all of it secured by an exclusive contract.

The announcement by the Ministry of Finance comes at a time when Xiaomi India is preparing its first product launch of the year. On January 6, Xiaomi India will announce its Xiaomi 11i series smartphones in our market. One of the models in the Xiaomi 11i series, dubbed the Xiaomi 11i HyperCharge, is bringing a 120W fast wired charging solution, which is a first for a smartphone sold in India.

Xiaomi in its home market of China also released its flagship Xiaomi 12 series smartphones. Consisting of three models, i.e., Xiaomi 12X, Xiaomi 12, and Xiaomi 12 Pro, all three models are rumoured to make it to global markets this year, including India in the coming months.