Majority Of ED Seized Rs 5,551 Cr Was Royalty Payment Made To Qualcomm: Xiaomi

Mobile maker Xiaomi said on Sunday that a majority of the Rs 5,551.27 crore seized by the Enforcement Directorate were royalty payments to chip pioneer Qualcomm.

Xiaomi has expressed its disappointment with the decision and said that more than 84 per cent of the entire Rs 5,551.27 crore its Indian chapter paid were to Qualcomm Group (USA), a third-party US listed company. 

This payment was for the in-licensed technologies, including Standard Essential Patents (SEPs) and IPs used in our Indian version of smartphones, Xiaomi said in its statement.

On Friday, a Competent Authority under Foreign Exchange Management Act (FEMA) had confirmed the seizure order of Rs. 5,551.27 crore by the Directorate of Enforcement (ED) against Xiaomi Technology India Private Limited.

“We believe our royalty payments and statements to the bank are all legitimate and truthful," Xiaomi said in its statement on Sunday.

The seizure order was the highest amount confirmed by the Authority till date in India.

“Such huge amounts in the name of Royalties were remitted on the instructions of their Chinese parent group entities. The amount remitted to other two US based unrelated entities were also for the ultimate benefit of the Xiaomi group entities”, the competent Authority had said in its statement on Friday.

All royalty payments made by Xiaomi India were only related to sales done by Xiaomi India, and not for any other countries or regions. This has also been confirmed by the Qualcomm Group (USA). These royalty payments were made via RBI approved and mandated banking channels and are legitimate commercial arrangements, Xiaomi statement said.