New Delhi: It seems that suspected financial crimes are not the only reason Indian law-enforcement agencies are cracking down on Chinese companies in the country.
There are equally worrying security concerns about their operations in India, and law-enforcement agencies, including the tax department, have been asked to share information with each other to stay on top of cases against these companies, ThePrint has come to know.
For example, the ministries of home, finance and foreign affairs are going to work together to ensure that if there is a case of tax evasion by a Chinese company where foreign channels are involved, information on related transactions can also be shared. Is. Enforcement Directorate (ED).
comes on the back of development action Taken by various agencies against some of the biggest Chinese telecom companies doing business in India including Oppo, Vivo, Huawei and Xiaomi.
These companies are being investigated for several alleged offenses such as tax evasion, wrongful availing of duty exemptions and money laundering. While the companies claim to operate in compliance with the law, China took a dim view action taken.
Senior government officials at ThePrint said that some companies that are registered in India but take instructions from China, their data is saved in cloud servers, where Indian entities’ account information is being shared directly with Chinese parent companies.
“Oppo and Vivo are some of the companies that you see, but there are many Chinese companies, for example, in fintech, that have no business here, but they are registered and these companies are used by their parent companies based in China. To send money back. , This is primarily a security issue,” a top government official told ThePrint.
“They are not transparent, their books of accounts are in the cloud, the password for that cloud is in Beijing. We want proper coordination between government departments,” he said.
“Even in the tax department, we have informed that if there is any information, please share it with other agencies,” said a senior finance ministry official on condition of anonymity.
According to government officials, though these companies are registered in India as separate entities from their parent firms, they are taking instructions from China and repatriating large sums of money to the neighboring country so that they do not have to pay tax in India. .
The government has been cracking down on such institutions since the beginning of 2020 – for the first time To put restrictions on Chinese mobile applications and then Chinese firms in violation of Indian laws by alleged income tax evasion and money laundering.
In September 2020, the Ministry of Electronics and Information Technology exercised its power under Section 69A of the Information Technology Act, 2000 and blocked it. 118 Mobile App “In view of the emerging nature of threats”, it said that they were engaged in activities prejudicial to the sovereignty and integrity of India, the defense of India, the security of the state and public order.
income in july do Department case registered Against top executives of Huawei Telecom (India), including its chief executive Li Xiongwei, for allegedly withholding vital information needed to calculate taxes and returning a large sum of money to parents. company in the form of dividends, reducing your taxable income in India.
In May, Liu had stopped By tax officials from a flight to Bangkok at New Delhi’s Indira Gandhi International Airport.
While Xiaomi is reportedly being investigated by the ED “illegal remittances” The parent Chinese company, in July, was searched by the agency at 48 locations related to Vivo Mobiles India Pvt Ltd and its 23 affiliated companies in connection with allegations of money laundering.
Read also: ‘Fake address, fraudulent intent’: why India is cracking down on firms with Chinese directors
Cross-border tension increased action?
The frequency of action against Chinese firms is said to have increased after relations between India and China hit a new low due to the border standoff in Ladakh that began in 2020. This particularly worsened after the Galwan Valley conflict in June 2020, which led to the death of soldiers from both sides.
experts ThePrint spoke to He believes cross-border tensions have intensified government actions against Chinese-owned companies, with domestic authorities having little faith in Chinese companies investing in India.
an 8 august bloomberg report good said India wants to ban Chinese smartphone makers from selling devices for less than Rs 12,000 (about $150). My faltering domestic smart fone The industry is a setback for brands including Xiaomi Corp”.
India’s trade deficit with China has widened in China’s favor in the first three months of the current financial year. India’s imports from China stood at $24.3 billion in the April-June period, an increase of 18 per cent over the previous year. But its exports to China shrank By grew 31 percent to $4.6 billion in the quarter.
The top goods India imports from China include electronics, chemicals, computer hardware and telecommunications equipment, while it exports petroleum products, marine products, iron ore, castor oil and spices.
(Edited by Gitanjali Das)
Read also: ED seizes Rs 55.51 billion from Chinese company Xiaomi for forex violation