India proposes fraud investigation into Xiaomi

India’s Serious Fraud Investigation Office (SFIO) has recommended a detailed probe into Xiaomi regarding alleged irregularities in its business model and compliance with foreign investment laws. The investigation aims to examine the movement of funds and verify whether the company obtained mandatory investment approvals following the tightening of scrutiny on Chinese investments after the 2020 border clashes.

The proposed 21-point investigation framework includes reviewing the beneficial ownership of foreign investors, checking for material misstatements in financial reports, and assessing potential violations of Foreign Direct Investment (FDI) rules. The SFIO noted that the recommendation is based on complaints and information provided by the Ministry of Commerce.

This development follows existing regulatory scrutiny of Xiaomi in India, including investigations into customs duty evasion and Foreign Exchange Management Act (FEMA) violations. Xiaomi has stated it has not yet received formal notice from the SFIO and maintains that it complies with all local laws.