China wants India to treat Chinese companies fairly as Xiaomi claims ED threatened its executives of physical violence

• Chinese authorities have called on India to provide a fair, just and non-discriminatory environment to Chinese companies.
• This comes soon after Xiaomi accused the ED of “physical violence” threats and coercion.
• The ED had recently seized ₹5,551.27 crore from Xiaomi India for alleged FEMA violations.

Chinese smartphone maker Xiaomi has been under the scanner of Indian authorities for some time now. The company’s global vice president Manu Kumar Jain was summoned by the Enforcement Directorate (ED) nearly a month ago.

Earlier this month, the ED had said that it had seized ₹5,551.27 crore from Xiaomi India for alleged Foreign Exchange Management Act (FEMA) violations. The smartphone maker had then approached the Karnataka High Court (HC) to obtain interim relief.

In its order, the Karnataka HC allowed the company to use the seized amount for its day-to-day activities and scheduled the next hearing for May 12.

Xiaomi alleges threat of “physical violence” by ED

In a serious allegation against the country’s financial watchdog, Xiaomi has alleged that its top executives, including Manu Kumar Jain, faced threats of “physical violence” and coercion during questioning by the ED.

According to a court filing seen by Reuters, the company has claimed that officials from the ED had warned Manu Kumar Jain, the former India head and current global VP and the company’s current chief financial officer, B.S. Rao of “dire consequences” if they did not submit the statements desired by the agency.

The ED has dismissed these allegations as "untrue and baseless". The ED added that the executives from the company had deposed "voluntarily in the most conducive environment".

Beijing calls on India to treat Chinese firms fairly

Beijing has taken a strong view of the incident as Chinese state media outlet Global Times has said that the incident with Xiaomi could be seen as an example of Indian crackdown on Chinese companies.

Zhao Lijian, a Chinese foreign ministry spokesperson said that Beijing “resolutely upheld Chinese companies' rights and interests”.

He further called upon India to provide a fair, just and non-discriminatory environment to Chinese companies.

"China hopes India will provide a fair, just, non-discriminatory business environment to Chinese companies with investments and operations in India, carry out investigations in compliance with the law, and enhance international investor confidence," Lijian added.

Xiaomi’s importance in India and China

According to a report by Counterpoint, Xiaomi had a market share of 24% in India in 2021, making it the biggest smartphone maker in the country. Xiaomi reportedly has a market share of around 15% in China, making it the fifth largest smartphone maker in the country.

Xiaomi is important to both China and India. While Xiaomi is a major player in the smartphone Industry in India, China depends on Xiaomi, not just for the local market, but for exports as well.

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