Amid Regulatory Scrutiny, Xiaomi Faces Potential SFIO Investigation in India

India's Serious Fraud Office has proposed an investigation into Xiaomi for alleged business model irregularities and foreign investment compliance. The investigation arises amidst Xiaomi's declining market share and existing legal challenges. The recommendation considers fund movements and investment approvals following tightened regulations on Chinese investments in India.

The Serious Fraud Investigation Office (SFIO) in India has suggested a thorough probe into Xiaomi, targeting alleged irregularities in the company's business practices and adherence to foreign investment laws. This indication came from a government document, potentially heightening scrutiny on the Chinese smartphone giant in India.

Once commanding India's smartphone market, Xiaomi now faces dwindling sales due to competition from Apple and Samsung. It's also entangled in tax and royalty payment disputes. The SFIO's recommendation includes examining Xiaomi’s financial conduct and whether the firm sought necessary investment approvals post-2020, following escalated oversight of Chinese investments due to border tensions.

A source notes the proposal awaits government appraisal. This development precedes Chinese President Xi Jinping's anticipated attendance at an Indian BRICS summit. Xiaomi asserts compliance with local laws, despite the absence of official SFIO notice. The investigation could further challenge Xiaomi amidst ongoing economic tensions.