Xiaomi is accused of making illegal remittances abroad "in the guise of royalty" payments.
China on Monday expressed hope that India will provide a "fair, just and non-discriminatory environment" to its companies as it reacted guardedly to reports of top executives of Chinese smartphone maker Xiaomi faced a probe by the Enforcement Directorate regarding its remittances abroad.
“China is closely following the situation,” Chinese Foreign Ministry spokesman Zhao Lijian told a media briefing here, responding to a question on top Xiaomi executives’ allegation of “physical violence and coercion” by the Enforcement Directorate (ED) in its investigations into its remittances.
"We hope India will provide a fair, just, and non-discriminatory business environment for Chinese companies, conduct investigation, and law enforcement in accordance with laws and regulations so as to increase the confidence of global investors,” Zhao said.
He said the Chinese government always asks its companies to abide by laws and regulations while doing business overseas.
“But at the same time it firmly supports the Chinese companies in upholding their lawful rights and interests,” he said.
Xiaomi is accused of making illegal remittances abroad "in the guise of royalty" payments.
The ED on Saturday rejected as "baseless" the allegations that the statements of Xiaomi India officials, the wholly-owned subsidiary of Chinese mobile manufacturing company Xiaomi, were recorded "under coercion", saying the charges were an afterthought.
The federal agency was responding to certain news reports that said Xiaomi alleged in a recent filing before the Karnataka High Court that its top executives were threatened with "physical violence and coercion" during their questioning by ED investigators in Bengaluru.
The ED issued a statement saying it was "a professional agency with strong work ethics and there was no coercion or threat to the officers of the company at any point of time".
"The allegations that the statement of the officials of Xiaomi India was taken under coercion by ED is untrue and baseless," the ED statement said.
The development comes in the backdrop of the ED passing an order on April 29 to seize Xiaomi India's funds worth over Rs 5,551 crore over the alleged violation of the Indian foreign exchange law (Foreign Exchange Management Act).
The Karnataka High Court earlier this week stayed this ED order.
Xiaomi is a trader and distributor of mobile phones in India under the brand name MI.