India urged not to discriminate against Chinese companies

India urged not to discriminate against Chinese companies

Just over a week ago India seized $725.5 million from handset maker Xiaomi's local bank accounts, claiming the firm had made illegal remittances abroad disguised as royalty payments. The issue now seems to have prompted comment from both the Chinese government and its state media, a reminder, perhaps, of the ongoing tensions between India and China in recent years.

Earlier this week China urged India to ensure that Chinese companies operating in India are not discriminated against. This happened after Xiaomi said its executives in the country had alleged threats of violence during questioning over alleged illegal remittances by officials of India's Enforcement Directorate, which tackles financial crime. Xiaomi denies any wrongdoing. These allegations, denied by the Directorate, appeared in a filing to an Indian court.

The Indo-Asian News Service notes that Chinese state media outlet Global Times has said that the impression that Chinese and other foreign companies could be intentionally targeted and suppressed isn't favourable for India. This, Global Times says, is in part because India still faces the long-term challenge of developing its manufacturing sector, and attracting foreign investment is one of the priorities in moving towards this goal. 

The Global Times report said that what has happened to Xiaomi could be seen as another example of India's crackdown on Chinese companies.

Many Chinese companies have struggled to do business in India since a clash between soldiers on the countries' border in 2020. India has cited security concerns in banning more than 300 Chinese apps since then – including TikTok – and made it tougher for Chinese companies to invest in India.

An Indian court last week put on hold the Directorate's move against Xiaomi's accounts pending a hearing on May 12. The Justice involved stayed the ED order, subject to the condition that the petitioner operates the seized accounts for the purpose of carrying out the day-to-day activities of the company.


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