January 7, 2022: -India has demanded the local arm of Chinese smartphone maker Xiaomi to pay 6.53 billion rupees in import taxes, following an investigation.

On Wednesday, the Directorate of Revenue Intelligence carried out a probe that led to documents recovered during the finding of Xiaomi India premises, a Finance Ministry statement said.

“During the investigations, it further emerged that the ‘royalty and license fee’ paid by Xiaomi India to Qualcomm USA and Beijing Xiaomi Mobile Software Co. Ltd., China were not being added in the transaction value of the goods imported by Xiaomi India and its contract manufacturers,” it said.

“By not adding ‘royalty and license fee’ into the transaction value, Xiaomi India was evading customs duty being the beneficial owner of imported mobile phones, the parts, and components thereof,” the statement added.

After completing the investigation, the DRI issued three “show cause” notices to it related to the recovery of 6.53 billion rupees between April 2017 and June 2020. These notices are a court order requiring one or more parties to a case to justify, explain, or prove something to the court.

This is not initial India has taken action against Chinese technology companies.

The South Asian nation banned 118 apps linked to China in the previous year, which cited national security risks. It came at the height of geopolitical tensions between both countries.