Xiaomi Faces Fraud Probe
India's Serious Fraud Investigation Office Recommends Probe Into Xiaomi Over Compliance
Anonymous
Key Points
1
Xiaomi’s smartphone market share in India has fallen to 13%, leaving it in fourth place as it faces intensified competition from Apple and Samsung.
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The company has been unable to overturn a freeze on 55.51 billion rupees ($584 million) in Indian bank assets imposed in 2022 by India’s financial-crime agency over alleged illegal remittances; Xiaomi denies wrongdoing.
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There is no fixed timetable for the Ministry of Corporate Affairs to decide on the SFIO recommendation, and the process could take months. The ministry may approve the inquiry, reject it for insufficient grounds, or refer the matter to another government department.
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The proposed inquiry comes ahead of Chinese President Xi Jinping’s expected visit to India for a BRICS summit, adding diplomatic context to the renewed scrutiny of Xiaomi’s Indian operations.
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The SFIO is India’s principal corporate-fraud investigation agency and has the power to arrest and prosecute offenders, underscoring the potential seriousness of an approved investigation.
India's Serious Fraud Investigation Office has recommended a detailed probe into Xiaomi's Indian operations over potential irregularities in its business model, fund flows, and compliance with foreign-investment rules, according to Reuters. The investigation, which still needs approval from India's Ministry of Corporate Affairs, would examine whether Xiaomi obtained required government clearances and properly disclosed beneficial ownership changes.
The recommendation adds fresh regulatory pressure on the Chinese smartphone maker, which has already faced a $584 million asset freeze since 2022 and seen its market share in India plummet to 13%, leaving it in fourth place behind Apple and Samsung, according to NDTV Profit.
Xiaomi's Mounting Regulatory Troubles in India
Xiaomi faces a widening legal battle in India. In April 2022, the Enforcement Directorate froze 55.51 billion rupees ($584 million) in the company's Indian bank accounts over alleged unauthorized overseas royalty remittances. Xiaomi denies wrongdoing and says the money went to legitimate chip supplier Qualcomm. The company still cannot access those frozen funds, according to Inside Retail Asia.
The SFIO's new recommendation focuses on 21 specific areas: beneficial ownership structures, cross-border fund flows, relationships with e-commerce platforms and local sellers, and potential misstatements in financial records. If approved, investigators can summon executives and examine audit filings. Xiaomi said it has received no official notice and maintains full compliance with Indian law, according to Reuters.
Smartphone Market Share Collapses Amid Competition
Xiaomi's dominance in India has evaporated. The company once led India's smartphone market with a 19% share but now ranks fourth with just 13%, squeezed by Samsung and Apple. Revenue in India dropped 40% over three years to $2.52 billion in 2025, according to DigiTimes. Intense competition and regulatory headwinds have crippled the company's growth trajectory.
This market erosion leaves Xiaomi more vulnerable to regulatory action. With declining profits and market position, the company has less financial cushion to weather a lengthy investigation, which could take months or even years if the Ministry of Corporate Affairs approves it, according to legal experts cited by Reuters.
Approval Timeline Remains Uncertain and Diplomatic Tensions Loom
The Ministry of Corporate Affairs has no fixed deadline to decide on the SFIO recommendation. The ministry can approve the inquiry, reject it for insufficient grounds, or refer it to another government department—a process that typically takes months. Legal analyst Meghav Gupta told Reuters that if approved, full SFIO investigations can stretch over years.
The timing adds diplomatic weight. The recommendation came days before Chinese President Xi Jinping's expected visit to India for a BRICS summit, according to Ground News. This raises questions about whether the investigation reflects genuine compliance concerns or broader India-China tensions following New Delhi's 2020 decision to tighten scrutiny of Chinese investments after border clashes.
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