In yet another instance of the government coming down hard on Chinese firms, the Enforcement Directorate (ED) on Tuesday conducted searches at 44 places across the country in a money laundering investigation against smartphone manufacturer Vivo and related firms.
After the Indo-China border tensions in mid-2020, the government has been taking a tough stance against Chinese investments. It banned more than 300 Chinese apps the same year and barred vendors from countries sharing land border with India from bidding for any public projects without its prior approval.
Subsequently, Chinese telecom handset firms and gear manufacturers have been subjected to searches by ED and the income tax department for alleged violation of financial laws. Sources said that the searches at Vivo are being carried out under sections of the Prevention of Money Laundering Act (PMLA) at locations in several states including in Delhi, Uttar Pradesh, Meghalaya, Maharashtra and others.
A Vivo India spokesperson said they are cooperating with authorities. “Vivo is cooperating with the authorities to provide them with all required information. As a responsible corporate, we are committed to be fully compliant with laws,” the spokesperson said.
The ED filed a money laundering case after taking cognisance of a recent Delhi Police (EOW) FIR against a distributor of the agency based in Jammu and Kashmir where it was alleged that few Chinese shareholders in that company forged their identify documents.
The ED suspects this alleged forgery was done to launder illegally generated funds using shell or paper companies and some of these “proceeds of crime” were diverted abroad or put in some other businesses by skirting Indian tax and enforcement agencies.
In April, ED had ordered seizure of Rs 5,551 crore worth deposits of Chinese smartphone major Xiaomi India for alleged contravention of the Foreign Exchange Management Act (FEMA). Later, Xiaomi got an interim relief order from the Karnataka high court.
Earlier in February, the income tax department had raided Chinese telecom equipment manufacturing company Huawei claiming to have found alleged manipulation of account books for reducing taxable income in India by the firm.
Premises of a number of Chinese smartphone companies, including Xiaomi, Oppo and Vivo, their distributors and linked associates were raided across the country by the IT department in December last year and it later claimed to have detected alleged unaccounted income worth over Rs 6,500 crore due to violation of the Indian tax law and regulations.
Vivo had 15% market share in the Indian smartphone segment in the first quarter of calendar 2022 with shipment of 5.5 million devices, according to market research and analysis firm IDC.
According to a Counterpoint research report, Vivo became the top 5G brand in the Rs 10,000-20,000 price segment in the country during March 2022 quarter.