Xiaomi India has announced changes in its India team amid the Enforcement Directorate’s eye on the Chinese electronics maker for violating the Foreign Exchange Management Act (FEMA) and sending unauthorised money abroad in the form of royalties.
The company named Chief Operating Officer Muralikrishnan B as its new president. The day-to-day operations, services, public affairs, and strategic projects will fall under the purview of the incoming president and this appointment will become effective on August 1.
Xiaomi also gave additional charge to its Chief Business Officer in India Raghu Reddy as the sales head, which will be effective from the same date.
The company, which has been on the radar of Indian authorities for its business practices, had announced in June that it would adjust the innards of the organisation.
The announcement at the time stated that Anuj Sharma would return as the division’s chief marketing officer while Alvin Tse, the previous general manager of Xiaomi Indonesia, would lead the Indian division.
Muralikrishnan has been with Xiaomi for several years. He formerly served as the chief operating officer of IndiaProperty.com and Jabong India, as well as Senior Vice-President at Myntra-acquired Jabong.
Since 2018, Muralikrishnan, an alumnus of IIM-Calcutta, has been positioned as COO at Xiaomi India. The company said: “Under Muralikrishnan’s able leadership, the company has witnessed strong growth across categories and has substantially scaled its organisational capabilities, execution machinery and built a solid foundation in the offline retail segment.”
Before Xiaomi, Reddy served as the senior director at Snapdeal and was also a Senior Consultant at Ernst and Young.
Chinese Companies Under Investigation
The reshuffle in the Xiaomi India management team took place as government agencies in India continue to closely monitor Chinese businesses, including other companies like Oppo and Vivo, in light of the ongoing border dispute with China.
While the ED is probing Xiaomi for sending unauthorised money abroad in the form of royalties, the company has denied any misconduct.
ED seized Xiaomi India’s assets worth more than Rs 5,500 crore in May this year. It had then summoned Manu Jain, who oversaw Xiaomi India for seven years, to investigate whether the company’s business practices complied with the country’s foreign exchange laws. Jain is currently the company’s group vice president, a position with global responsibilities.
At that time, the Chinese smartphone maker and one of the most popular brands in the Indian market, issued a statement saying that the business complies entirely with all rules and Indian legal requirements.
Additionally, it said: “We are cooperating with the ongoing investigation conducted by authorities ensuring they have all the necessary information.”
In the case of other companies, Indian authorities conducted a raid on dozens of Vivo’s offices in July. At that time, ED said that 119 bank accounts associated with Vivo India with a total of Rs 465 crore had been seized under the provisions of the Prevention of Money Laundering Act (PMLA), 2002.
The row of investigations also followed Chinese telecoms equipment giant Huawei Technologies Co.
However, after these probes began, the Chinese embassy in India immediately spoke out against “frequent investigations”. Counsellor Wang Xiaojian, a spokesman for the Chinese embassy, then stated that the probes have disrupted normal business activities and will “impede the improvement of the business environment in India” by affecting the “confidence and willingness” of foreign entities seeking to do business in the country.
Even in May, a spokesperson for China’s Foreign Ministry said: “We hope the Indian side can provide a fair, just and non-discriminatory business environment for Chinese companies making investment and operating in the country, and conduct investigation and law enforcement in accordance with laws and regulations so as to beef up the international community’s confidence in the investment.”
It was also stated at that time that Beijing has been “closely monitoring the matter”.
However, this did not pause the ongoing investigations. Most recently, the government released a statement according to which the Directorate of Revenue Intelligence has found that Chinese smartphone manufacturer Oppo avoided paying customs duties of Rs 43.9 billion.
The statement also noted that authorities discovered proof that Oppo had taken advantage of tariff exemptions for goods imported for use in the manufacture of mobile phones and it paid royalties that were not added to the transaction value of imported items, as required by the Indian law.
As a result, Oppo India has received a notice requesting payment of the customs duty and the Revenue Intelligence department has also suggested fines for Oppo India, its staff, and Oppo China.