Xiaomi claims over 84% in seized funds were royalty paid to Qualcomm

Xiaomi claims over 84% in seized funds were royalty paid to Qualcomm

Chinese consumer electronics manufacturer Xiaomi Corporation has reportedly revealed that 84% of the funds seized by the Enforcement Directorate (ED) were a part of royalty payments to Qualcomm Inc.

For those unaware, the ED had issued an order to seize a sum of USD 678 million worth of deposits from Xiaomi under the Foreign Exchange Management Act (FEMA).

The ED has charged the Chinese phone manufacturer on the grounds of illegally transferring the aforementioned amount to three companies – one that functions under the umbrella of Xiaomi Group, and two other US-based companies, under the guise of royalties.

Elaborating on the issue, Xiaomi has stated that they have exhaustively studied the order from ED and are hugely disappointed that none of their concerns or legal contentions have been properly discussed.

Interestingly both Qualcomm and Xiaomi firmly attest that the funds were directed as a part of a legitimate commercial arrangement that demands the payment of royalties to Qualcomm by Xiaomi India.

A spokesperson from the company reiterated that 84% of the amount accounted for the royalties paid by Xiaomi India to Qualcomm Group, which facilitated the integration of in-licensed technologies in the product portfolio of the Chinese consumer electronics company.

The company highlighted that the main motive for using Qualcomm’s in-licensed technologies was to build a strong consumer base for smartphones in India.

In the same line, Qualcomm Group confirmed that all royalty payments were made in return for the sales achieved solely by Xiaomi India and not for other countries or regions, as highlighted in the charges. In addition, these payments were legitimately transacted via RBI-approved & regulated banking channels as an official commercial arrangement between the two companies to maintain the highest degree of transparency.

Source Credits: - https://www.business-standard.com/article/companies/xiaomi-says-84-of-rs-5-551-cr-seized-by-ed-was-royalty-payment-to-qualcomm-122100200795_1.html