It’s been a tough year for Chinese smartphone makers in India as they try to stay above fraying political ties between Beijing and Delhi.
The increasingly difficult operating environment is encapsulated in market leader Xiaomi Corp. (1810.HK), which has been locked in a dispute with India’s tax man for much of this year. That tussle reached a new high last week, when Xiaomi said an Indian court’s refusal to lift a freeze on $676 million worth of its local assets had "effectively halted" its operations in the country.
India's Enforcement Directorate (ED), its federal financial crime agency, froze Xiaomi’s assets in April, alleging the company made illegal remittances to foreign entities by passing them off as royalty payments. Xiaomi said that over 84% of the assets seized by the ED were the equivalent of royalty payments made to leading U.S. smartphone chipmaker Qualcomm (QCOM.O).