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An Indian court docket on Thursday declined to elevate a freeze on Xiaomi’s $676 million (almost Rs. 5,500 crore) price of belongings, even because the Chinese language smartphone group mentioned this enforcement motion had “successfully halted” its operations in its key Indian market.

India’s federal monetary crime company, the Enforcement Directorate (ED), froze Rs. 5,551 crore of Xiaomi belongings in April, alleging the corporate made unlawful remittances to overseas entities by passing them off as royalty funds. Final week, an appellate physique confirmed the seizure.

Xiaomi, which denies any wrongdoing, challenged the asset freeze within the Excessive Courtroom of southern Karnataka state, saying in its authorized submitting it “is severely disproportionate and has successfully halted the operations” of the corporate.

Xiaomi and Samsung are market leaders in India’s smartphone market, the world’s second greatest after China, primarily based on information from Counterpoint, with an 18 p.c share every.

On Thursday, Xiaomi’s lawyer Udaya Holla sought to finish the freeze by looking for reduction from the decide, however the court docket mentioned the corporate should first present financial institution ensures overlaying the $676 million in belongings which are frozen.

Holla instructed the court docket such financial institution ensures would imply depositing all the quantity, making it tough for the corporate to operate and pay salaries and make stock purchases forward of Hindu pageant of Diwali — when shopper gross sales growth in India.

The decide declined any quick reduction, and adjourned the case till October 14.

Nargund M B, certainly one of India’s Extra Solicitor Generals, who was representing the Enforcement Directorate, urged the court docket to not grant any quick reduction to Xiaomi, and in addition requested for the financial institution ensures.

Xiaomi didn’t instantly reply to a request for remark.

Xiaomi has beforehand mentioned its royalty funds have been all authentic and truthful, including it’s going to “proceed to make use of all means to guard the popularity and pursuits.”

Many Chinese language firms have struggled to do enterprise in India because of political tensions following a border conflict in 2020. India has cited safety considerations in banning greater than 300 Chinese language apps since then, together with fashionable ones resembling TikTok, and in addition tightened guidelines for Chinese language firms investing in India.

© Thomson Reuters 2022


 

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