German Media: India's Serious Fraud Investigation Office Recommends Probe into Xiaomi's Business Model

The Indian Serious Fraud Investigation Office (SFIO) has recommended a detailed investigation into Xiaomi's operations in India.

A government document obtained by Reuters shows that the SFIO has advised launching an investigation into Xiaomi, citing concerns over its business model potentially violating regulations and failing to comply with foreign investment laws.

Xiaomi, a Chinese brand, was once the best-selling smartphone brand in India, but its market share has steadily declined amid fierce competition from Apple and Samsung. Additionally, Xiaomi faces multiple tax recovery demands and disputes over royalty payments.

The SFIO recommends that the investigation examine fund flows and whether Xiaomi applied for necessary investment approvals after India tightened scrutiny on Chinese investments.

In a statement sent to Reuters, a Xiaomi spokesperson said the company has not received any notice or communication from the Serious Fraud Investigation Office, and added: "We take national laws of the countries we operate in seriously and always strictly comply with them."

In 2020, India introduced stricter foreign investment regulations requiring Chinese entities to obtain prior government approval for any investment in India. Several companies, including Xiaomi, have stated this has caused investment delays.

Since 2022, the SFIO has frozen Rs 55.1 billion (approximately $584 million) of Xiaomi’s assets in Indian banks, alleging illegal fund transfers—claims Xiaomi denies. Xiaomi has so far been unable to overturn the freeze order issued by the SFIO.

Data from Counterpoint Research shows Xiaomi’s market share in India’s smartphone sector has dropped from a previous 19% to 13%, placing it fourth. Xiaomi’s projected revenue in India for 2025 is expected to be $2.52 billion, a 40% decline compared to three years ago.

Source: DW, based on Reuters’ reporting from Germany

Original article: toutiao.com/article/1875877333634051/

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