India imposes tax penalty of over 100 billion KRW on China's Xiaomi for "import duty omission"

6.53 Billion Rupee Penalty Notice
Xiaomi Pushes Back "Upholding Legal Business Principles"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The Indian government has notified Xiaomi, a Chinese smartphone manufacturer, of a tax reassessment exceeding 100 billion won on allegations of evading import duties. Xiaomi has stated that it will cooperate with the Indian authorities' investigation through its local subsidiary but has pushed back, saying the issue arose due to complex technical matters.

According to local Indian media such as the Hindustan Times on the 5th (local time), the Indian Ministry of Finance discovered evidence that Xiaomi's Indian subsidiary evaded import duties in three cases and notified a reassessment for unpaid import duties amounting to 6.53 billion rupees (approximately 105.5 billion won).

The Indian Ministry of Finance stated, "Xiaomi's Indian subsidiary has been evading some import duty payments by not reflecting the patent royalties paid to Qualcomm in the US and Xiaomi's China headquarters in the prices of smartphones and various components from 2017 to 2020." In response to the Ministry of Finance's notification, Xiaomi India issued a statement saying, "We are reviewing the matter in detail and will provide all necessary documents to the authorities."

However, Xiaomi's China headquarters has pushed back, saying the issue is not a simple one. Through Chinese media such as Pengpai, Xiaomi China stated, "Xiaomi adheres to lawful business principles worldwide," and "The root of this tax issue lies in whether patent royalties should be reflected in the price of imported goods, which is a complex technical issue in many countries."

If this customs issue prolongs, Xiaomi's market share in India is expected to shrink somewhat. Despite worsening relations between India and China, Xiaomi currently maintains the number one position in the Indian smartphone market. According to market research firm IDC, Xiaomi's smartphone shipments in the Indian market reached 41 million units in 2020.

This content was produced with the assistance of AI translation services.