After Xiaomi executives stated they were threatened with violence during questioning over alleged illicit transfers, China urged India to ensure Chinese companies operating in India are not discriminated against.

In a plea to an Indian court on Saturday, Xiaomi, India’s largest smartphone seller, detailed alleged threats of physical assault and coercion from officials of India’s Enforcement Directorate, which combats financial crime.

The charges were later debunked by the Directorate.

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Xiaomi’s local bank accounts were seized in late April by India, which said the company had made illicit transactions abroad “under the pretext of” royalty payments. Xiaomi denies any wrongdoing and claims that all of its royalties are legal.

When asked about Xiaomi’s court filing, a Chinese foreign ministry official said Beijing was committed to protecting Chinese enterprises’ rights and interests.

“China hopes that India will provide a fair, just, and non-discriminatory business environment for Chinese companies with investments and operations in India, conduct investigations in accordance with the law, and boost international investor confidence,” spokesperson Zhao Lijian said at a press conference in Beijing.

Reuters reached out to the Enforcement Directorate, as well as spokespeople for the Indian government and Xiaomi, which has a 24 percent market share in China and employs roughly 1,500 people there.

Since a border incident between the two nations in 2020, many Chinese companies have struggled to do business in India. Since then, India has banned over 300 Chinese apps, including TikTok, and tightened regulations for Chinese companies investing in India, citing security concerns.
The Directorate’s action against Xiaomi’s accounts was put on hold last week by an Indian court pending a hearing on May 12. It was one of several Chinese enterprises raided by tax officials in a separate probe in December.