Treat Chinese firms fairly, Beijing tells India after Xiaomi's threat claim

By Eduardo Baptista and Aditya Kalra

BEIJING/NEW DELHI (Reuters) -China on Monday urged India to ensure Chinese companies operating in India are not discriminated against, after Xiaomi Corp said its executives there had faced threats of violence during questioning over alleged illegal remittances.

Reuters reported on Saturday that Xiaomi, the biggest smartphone seller in India, had outlined the alleged threats of physical violence and coercion from officials of India's Enforcement Directorate - which tackles financial crime - in a filing to an Indian court.

The Directorate subsequently called the allegations untrue.

In late April, India seized $725 million in Xiaomi's local bank accounts, saying the firm had made illegal remittances abroad "in the guise of" royalty payments. Xiaomi denies wrongdoing and says all its royalty payments are legitimate.

A Chinese foreign ministry spokesperson, asked about Xiaomi's court filing, said Beijing resolutely upheld Chinese companies' rights and interests.

"China hopes India will provide a fair, just, non-discriminatory business environment to Chinese companies with investments and operations in India, carry out investigations in compliance with the law, and enhance international investor confidence," spokesperson Zhao Lijian told a news briefing in Beijing.

Neither the Enforcement Directorate, nor spokespeople for India's government or Xiaomi, which has a 24% share of China's smartphone market and around 1,500 staff there, immediately responded to Reuters requests for comment.

Many Chinese companies have struggled to do business in India since a clash between soldiers on the countries' border in 2020. India has cited security concerns in banning more than 300 Chinese apps since then - including TikTok - and tightened norms for Chinese companies investing in India.

An Indian court last week put on hold the Directorate's move against Xiaomi's accounts pending a hearing on May 12. In December, it was one of several Chinese companies raided by tax inspectors in a separate investigation.

(Reporting by Aditya Kalra in New Delhi and Eduardo Baptista in Beijing; Additional reporting by Abhirup Roy; Editing by Ed Osmond and John Stonestreet)