India says: Xiaomi the $88m in missing import taxes, please

Investigation finds royalty and licensing fees excluded from transaction values

India's Ministry of Finance has ordered Xiaomi to pay ₹6.53bn ($88m) in import taxes after discovering the local arm of the Chinese electronics company was undervaluing its transactions.

The finding was the result of an investigation carried out by India's Directorate of Revenue Intelligence. The investigators said they'd found documents indicating Xiaomi India was remitting royalty and licensing fees to Qualcomm and Beijing Xiaomi Mobile Software, but not including them in the transaction value of the imported goods.

"By not adding 'royalty and licence fee' into the transaction value, Xiaomi India was evading Customs duty being the beneficial owner of such imported mobile phones, the parts and components thereof," said the Ministry of Finance in a canned statement.

Xiaomi had a great 2021 in India, growing 84 per cent year-on-year to take the largest smartphone market share on the subcontinent at the end of Q2, according to IDC. The boon was not a fluke as Xiaomi was responsible for about a quarter of the 150 million-plus smartphones shipped to India in 2020.

Many governments have sought to crack down on Chinese technology, including the US, which keeps an ever-evolving blacklist of companies. In March, Xiaomi received a preliminary injunction from a Trump-era blacklist that banned it from listing on US stock exchanges.

In September, Lithuania told its citizens to trash any Xiaomi-made mobile devices after it found the company could remotely enable censorship tools.

Further back to 2020, India banned 118 Chinese apps, claiming they were being used against India's national interests as border disputes flared and geopolitical tensions rose. By January last year, the ban on 59 of those apps was made permanent. ®