Xiaomi, Oppo, Vivo And Lenovo Under Probe Over Alleged GST Evasion

India has required major Chinese smartphone brands Xiaomi, Oppo, Vivo and computer maker Lenovo to pay appropriate taxes, and is seeking recovery from the owners of the brands after launching an investigation into alleged cases of GST and tax evasion.

In response to pointless questions in the Rajya Sabha, Minister of Electronics and Information Technology Rajeev Chandrasekhar listed the amount of GST and duties avoided by major Chinese smartphone brands from 2017 to July 2023.

Xiaomi India has received several tax evasion notices totaling Rs 682.51 crore in FY20, FY21 and FY22, of which the government has obtained Rs 10.76 crore, Upper House of Parliament said in a written response. In 2020, the company avoided customs and paid 31.77 lakh interest and 13.3 lakh fine.
The company is being investigated for evasion of GST of up to Rs 168.63 crore from 2017 to July 2023 and so far Rs 82.04 crore has been recovered by the government, said the minister.

He added that Oppo avoided customs duties of Rs 4,403.27 crore in 20 and 21 rupees and the government received a cause notification of Rs 476.79 crore from the company. Moreover, the government discovered Rs 683.04 crore embezzlement by Oppo and recovered Rs 738.04 crore.

In India, another top five Chinese smartphone brand, Vivo, was charged with evading customs duties of Rs 2,875 crore in FY21 and FY23. Regarding GST, the minister said that the company managed to avoid Rs 48.25 crore and part of the embezzlement is still being processed. So far, the government has received 51.25 million rupees from the company for the same. Computer brand Lenovo, which operates the Motorola brand in India, has been charged Rs 42.36 crore for GST evasion, although no recovery has been registered yet. We had not received any notification regarding the GST evasion until today's parliamentary statement. We will continue to work closely with the government to understand these allegations and provide necessary clarifications," said a Lenovo India spokesperson in response to ET's inquiries.

Xiaomi, Oppo, and Vivo did not respond to ET's email seeking comment.

Lens with Chinese brand

The development comes as Chinese smartphone brands operating in India have come under intense scrutiny since the border clashes between Indian and Chinese troops in 2020, with investigative agencies and top officials raiding their premises several times.

The Enforcement Directorate alleges that Xiaomi India violated India's Foreign Exchange Act by sending more than Rs 5,500 crore abroad in the name of royalties, in addition to allegations of tax evasion by the Income Tax Department.

In addition, Oppo was accused of customs evasion by the Directorate of Revenue, while Vivo was accused of illegally diverting more than 465 million birr from its bank account.

All three companies have pleaded not guilty to any wrongdoing and have appeared in court against the government.

In his written reply, the minister said that major Chinese mobile brands - Oppo, Vivo, Xiaomi, Transsion, Realme and OnePlus - had cumulative sales in India of Rs 1.5 lakh crore in 2022, employing more than 75,000 people directly in manufacturing, operations and 80 sales.

Some Chinese companies set up their own manufacturing units, while others worked through contract manufacturers, such as Bharat FEH and DBG Technology, he said. Distribution of the phones is mostly handled by Indian companies, while some companies like Oppo and Vivo do it through Chinese distributors.

The minister also highlighted the steps taken by the government to promote and deepen the electronics manufacturing ecosystem in India such as the Incentive Scheme for Relations of Large Electronic Manufacturers (PLI), the Promotion of Electronic Components and Semiconductor Manufacturers Scheme (SPECS) and others.