Xiaomi faces fresh India probe over investment rules

India's Serious Fraud Investigation Office (SFIO) has recommended Xiaomi, the Chinese smartphone maker, for a probe into alleged irregularities in its business model and compliance with foreign investment laws, according to a government document. The investigation, which is still pending approval from the Ministry of Corporate Affairs, would examine the movement of funds and whether Xiaomi sought mandatory investment approvals following India's tightening of scrutiny over Chinese investments since 2020.

The probe is expected to focus on the beneficial ownership of foreign investors and group entities, and verify if any direct or indirect ownership was disclosed and approved as required. Xiaomi's spokesperson stated that they have not received any notice from SFIO and emphasized their commitment to complying with Indian laws. The investigation could add to Xiaomi's challenges in India, where it has seen a decline in market share and faces tax demands and royalty payment disputes.