Court lifts ban on Chinese smartphone company Xiaomi’s $450 million deposit in India

A court in Karnataka has lifted the stay imposed by the Income Tax Department on deposits of over $440 million by Chinese smartphone maker Xiaomi in India. The ban was imposed in February as part of an investigation into alleged tax evasion. More information about the court’s decision has not been received.

Queries sent by Reuters to Xiaomi and the Income Tax Department remained unanswered. The company was accused of procuring smartphones from contract manufacturers in the country at inflated costs. Due to this, the company had sold smartphones to customers by showing low profit in record and saved corporate income tax. Funds over $660 million have also been frozen in another case against the company. In this case, Xiaomi is accused of illegally remittance abroad. In this matter, Xiaomi has challenged, on which the decision of the court is pending. The company’s unit in India has been accused of providing false information to its banker Deutsche Bank over the years. The company had claimed that it had an agreement for payment of royalty, whereas there was nothing like that. Probe against the company has found that it had ‘illegally’ remitted money under the ‘head’ of royalty to US chip maker Qualcomm and others.

Xiaomi’s revenue decreased by about 10 percent in the last quarter. The company’s sales have been affected by the slowdown in the global smartphone market and declining demand in China. Sales of its mobile devices have decreased by about 11 percent. During July-September, the company’s sales stood at 70.5 billion yuan (about Rs 80,900 crore). Although the company’s sales have been slightly higher than the forecast, but the company’s net loss of about 1.5 billion yuan is surprising.

Due to the zero covid policy in China, the difficulties of tech companies have increased. This has hindered the supply chain. Apart from this, the demand for electronics is decreasing due to increasing inflation and decreasing economic growth. Xiaomi has succeeded in increasing the market share in Europe. Apart from this, it is also included in the top companies of the smartphone market in India.