Serious Fraud Investigation Office Recommends Probe Into Xiaomi’s India Business Over Foreign Investment Compliance
Summarized by AI; it may make mistakes. Check important info
Summarized by AI; it may make mistakes. Check important info
India’s Serious Fraud Investigation Office (SFIO) has recommended a detailed investigation into Xiaomi Technology India Private Limited over alleged irregularities in its business model and compliance with foreign investment laws, Reuters reported.
Probe To Examine Fund Flows, Ownership
According to a government memorandum reviewed by Reuters, the proposed investigation would examine the movement of funds and whether Xiaomi obtained mandatory government approvals for investments following India’s tighter scrutiny of Chinese investments introduced after the 2020 border clashes.
The memorandum, drafted in May, calls for scrutiny of the beneficial ownership of Xiaomi’s foreign investors and group entities. Investigators would examine whether any direct or indirect ownership, control or changes in control were properly disclosed and approved.
The SFIO has proposed a 21-point investigation framework covering the scope, methodology and proposed action. This could include summoning company executives and examining financial statements and auditor reports filed with the Indian government.
Xiaomi Says It Has Received No Notice
Xiaomi told Reuters that it had not received any notice or communication from the SFIO.
“We accord paramount importance to the laws of the land and comply with them fully at all times,” a Xiaomi spokesperson told Reuters.
The Ministry of Corporate Affairs and the SFIO did not respond to Reuters’ requests for comment.
The proposal is currently pending before the Ministry of Corporate Affairs. The ministry can approve the recommendation, reject it or ask other government agencies to examine the matter.
Xiaomi Faces Other Regulatory Challenges
The proposed SFIO investigation adds to Xiaomi’s existing regulatory and financial challenges in India.
Reuters reported that the company has been unable to overturn a freeze of 55.51 billion rupees ($584 million) in Indian bank assets imposed by the financial crime-fighting agency in 2022 over alleged illegal remittances. Xiaomi has denied wrongdoing.
The company has also faced tax demands and disputes over royalty payments.
Xiaomi, once India’s top-selling smartphone brand, has slipped to fourth place with a 13% market share, down from 19%, according to Counterpoint Research. Its India revenue stood at $2.52 billion in 2025, 40% below the level recorded three years earlier, Reuters reported.
E-Commerce Deals Also Under Scrutiny
The proposed investigation could also examine Xiaomi’s relationships with e-commerce platforms and Indian sellers.
Reuters reported that the SFIO wants to assess whether Xiaomi exercised “de facto control” over Indian sellers or launch partners while presenting those arrangements as being at arm’s length.
The investigation proposal refers to preferential or exclusive launches of Xiaomi products on selected e-commerce platforms and whether such arrangements conflicted with India’s foreign direct investment rules governing e-commerce.
In 2024, India’s antitrust regulator alleged that Xiaomi was among smartphone companies involved in arrangements with Amazon and Flipkart for exclusive online product launches, potentially breaching competition rules. Xiaomi has not commented on that matter.
Decision Rests With Corporate Affairs Ministry
India introduced stricter foreign investment rules in 2020, requiring prior government approval for investments from Chinese entities. Some restrictions were relaxed earlier this year as New Delhi and Beijing worked to stabilise relations along their disputed border.
The SFIO recommendation comes ahead of Chinese President Xi Jinping’s expected visit to India for the BRICS summit, adding a fresh regulatory development to the broader India-China economic relationship.
