New Delhi: Suspected financial crimes, it seems, are not the only reason Indian law enforcement is cracking down on Chinese companies in the country.

There are equally worrying security concerns about their operations in India, and law enforcement agencies, including the tax service, have been asked to share information with each other to stay abreast of cases against these companies, said learned ThePrint.

The ministries of interior, finance and external affairs will work together, for example, to ensure that in the event of tax evasion by a Chinese company involving foreign chains, information on related transactions could also be shared with the Directorate for Execution (DE).

Development comes on the back of stock taken by different agencies against some of the biggest Chinese telecom companies doing business in India, including Oppo, Vivo, Huawei and Xiaomi.

These companies are being investigated for a host of alleged offenses such as tax evasion, misuse of duty waivers and money laundering. While companies claim to operate within the law, China takes a dim view of the crackdown.

Senior government officials ThePrint spoke to said that some companies that are registered in India but receive instructions from China have their data stored on cloud servers, where account information from Indian entities is directly shared with Chinese parent companies.

“Oppo and Vivo are companies that you see, but there are many Chinese companies, for example in fintech, that don’t have companies here, but they are registered and use these companies to refer the money to their China-based parent companies. . It’s mainly a matter of security,” a senior government official told ThePrint.

“They are not transparent, their account books are in the cloud, the password for this cloud is in Beijing. We want good coordination between ministries,” he added.

A senior finance ministry official said on condition of anonymity: “Even in the tax department, we have communicated that in case there is any information, please share it with other agencies.”

According to government officials, although these companies are registered in India as separate entities from their parent companies, they receive instructions from China and channel substantial sums of money to the neighboring country so that they do not have to no tax payable in India.

The government has been cracking down on these entities since the start of 2020 – first in prohibition Chinese mobile apps, then finding Chinese companies violating Indian laws by allegedly evading income tax and laundering money.

In September 2020, the Department of Electronics and Information Technology invoked its power under Section 69A of the Information Technology Act 2000 and blocked 118 mobile apps “in view of the emerging nature of the threats”, claiming that they were engaged in activities detrimental to the sovereignty and integrity of India, the defense of India, the security of the State and to public order.

In July, revenues tax department filed a case against senior officials of Huawei Telecommunications (India), including its managing director Li Xiongwei, for allegedly withholding important information necessary for tax calculation and repatriating a huge sum to the parent company company in the form of dividends, reducing his taxable income in India.

In May, Li has been arrested by tax officials at Indira Gandhi International Airport in New Delhi to fly to Bangkok.

As Xiaomi is investigated by ED for allegations “Illegal remittances” At the Chinese parent company, in July the agency raided 48 sites belonging to Vivo Mobiles India Private Limited and 23 of its associated companies in connection with money laundering allegations.


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Cross-border tension escalating repression?

The frequency of actions against Chinese companies is said to have increased after India-China relations hit a new low due to the border standoff in Ladakh, which began in 2020. It particularly worsened after the Galwan Valley clash in June 2020, which led to the deaths of soldiers on both sides.

experts ThePrint spoke to believe that cross-border tensions have intensified government actions against Chinese companies, with national authorities having little confidence in Chinese companies investing in India.

August 8 Bloomberg report said India was seeking to stop Chinese smartphone makers from selling devices cheaper than Rs 12,000 (about $150) to “revive its own failing servant smartphone industry, dealing a blow to brands such as Xiaomi Corp”.

In the first three months of the current fiscal year, India’s trade deficit with China has widened in favor of the latter. India’s imports from China amounted to $24.3 billion between April and June, registering an 18% growth over the previous year. But its exports to China have contracted by 31 percent in the quarter to $4.6 billion.

The main goods that India imports from China include electronics, chemicals, computer equipment and telecommunications instruments, while it exports petroleum products, marine products, iron ore, oil castor oil and spices.

(Edited by Gitanjali Das)


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