SFIO Recommends Detailed Probe into Xiaomi India's Business Model

India's Serious Fraud Investigation Office (SFIO) has recommended a detailed investigation into Xiaomi India's business model and adherence to the Foreign Exchange Management Act (FEMA), Reuters reported. The agency is reportedly examining the movement of funds and whether mandatory investment approvals were obtained following tightened scrutiny of Chinese investments in 2020.

The proposed investigation would scrutinize Xiaomi's foreign investors, fund transfers between the company and related entities, and assess if financial statements contain material misstatements. It would also look into Xiaomi's relationships with e-commerce platforms.

Xiaomi is already facing regulatory scrutiny in India. In January 2022, the government issued show-cause notices seeking 653 crore rupees (approximately $8 million) in customs duty. Additionally, in 2022, the Enforcement Directorate seized 5,551 crore rupees (approximately $68 million) from Xiaomi India's bank accounts, alleging illegal overseas remittances as royalty payments.