Xiaomi could face a fresh investigation in India after the country’s Serious Fraud Investigation Office (SFIO) recommended a probe into the Chinese smartphone maker’s business model and compliance with investment laws.
According to Reuters, the SFIO released a document recommending that authorities examine the movement of funds involving Xiaomi and determine whether the company obtained mandatory investment approvals.
The Indian government is reviewing the recommendations, with possible action expected following the review.
The SFIO said the proposed investigation should focus on the beneficial ownership of foreign investors and group entities.
“The most important part of the proposed investigation should be examination of the beneficial ownership of foreign investors and group entities,” the agency reportedly stated in the document.
It added that an investigation should establish whether any direct or indirect beneficial ownership, control or change in control was disclosed and approved as required.
The SFIO did not specify the particular matters it wants investigated.
The agency is responsible for investigating corporate fraud and has powers to arrest and prosecute offenders.
The potential probe adds to Xiaomi’s existing legal and financial difficulties in India. The company is already facing a tax bill in the country, while some of its banking assets were frozen in 2022 over alleged illegal remittances, an allegation Xiaomi denies.
Xiaomi’s position in India’s smartphone market has also weakened in recent years. Counterpoint Research figures show the company currently ranks fourth, with a 13% market share.
