Following in the footsteps Vivo and Xiaomi, another Chinese tech company was also charged with violating Indian laws. The Chinese smartphone giant Guangdong Oppo Mobile Telecommunications Corp., Ltd. (OPPO) is accused of evading more than $571 million in import duties.
On July 13, the Directorate of Revenue Intelligence (DRI), India’s anti-smuggling agency, issued a press release (pdf) alleging OPPO India evaded paying Rs. 4,389 crore (about $571 million) in customs duties.
The DRI is a member of the Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance and Government of India.
“A sum of Rs 450 crore [about $60 million] has been voluntarily deposited by Oppo India, as partial differential Customs duty short paid by them,” the statement said.
The DRI issued a show-cause notice to OPPO India, requesting payment of unpaid customs fees. The show cause notice asks the recipient of the notice to explain or justify to the court why they should not take disciplinary action against them for the alleged offense.
OPPO, a leading smartphone and consumer electronics company, is based in Dongguan (China), with Asia its main market.
OPPO is a manufacturer, distributor, wholesaler, trader, and retailer of handsets and accessories in India. Oppo and OnePlus are some of the brands it deals with.
The company was accused of “wilful misdeclaration in the description of certain items imported” for use in the manufacture of mobile phones, resulting in claims of ineligible duty exemption amounting to about $388 million, according to the Indian Ministry of Finance.
The ministry released a press release pointing out incriminating evidence in the offices and residences of OPPO India’s key management personnel in relation to the DRI searches.
A few senior managers and suppliers from India of OPPO India accepted voluntary declarations of “the submission of wrongful descriptions”.
A person who makes a statement freely, without any external pressure or obligation of his/her own volition, is considered to be free from outside influence.
The company was accused of remitting and making provisions for payments of “royalty” and “license fees” to various multinational companies, including those based in China, for using their proprietary technology, brand, or intellectual property right (IPR) license, The Times of India (TOI) reported. And this was not being added to the transaction value of the imported goods, resulting in an alleged duty evasion of about $183 million.
A spokesperson for OPPO India told TOI they have “a divergent view” on the charges listed in the show cause notice and that OPPO India would take all necessary steps to remedy the situation, “including any remedies under the law .”
The TOI report notes that “Chinese telecom operators, ranging in size from Huawei to Vivo and Vivo have faced multiple actions by [Income Tax Department Enforcement Directorate] as well as customs authorities .”
” The probes were launched after the government took the decision to closely monitor Chinese businesses, and to restrict their access to Indian markets following tensions in Ladakh.” the article stated.
More Chinese Companies Accused of Breaking Laws
According to 36Kr, a China-based publishing and data company, over 100 Chinese companies went to India in 2014 to explore market opportunities, including Xiaomi.
Xiaomi is the largest Indian smartphone maker and has been leading the market for five quarters consecutively. However, in the first quarter of 2022, Xiaomi saw a 24 percent decline in its market share compared to the same period last year, local news reported.
Prolonged COVID-19 outbreaks and a shortage in core components have long plagued Xiaomi’s logistics, production, and offline stores, said Wang Xiang, partner and president of Xiaomi Group, during a company financial report teleconference, Chinese media reported on May 21.
In April, Indian authorities seized $725 million from Xiaomi, accusing it of breaking the country’s foreign exchange laws by making illegal remittances abroad.
The Enforcement Directorate (ED), India’s financial investigation agency, said the smartphone maker had transferred $725 million to “three foreign-based entities” under the guise of royalty payments, according to a statement quoted by the Press Trust of India.
On July 5, before OPPO was accused of customs duty evasion, ED raided 48 locations belonging to Vivo India and 23 associated companies, according to ED’s press release (pdf). TOI reports that Vivo India’s bank accounts had been temporarily frozen by ED. They were unfrozen on July 13 under conditions set by the Delhi High Court.
According to a Bloomberg report in May, Indian authorities have probed more than 500 Chinese companies in India, including Xiaomi, OPPO, Vivo, Alibaba, and Huawei.
Many Indian companies have found it harder to get work visas.
Baosteel is a major Chinese steelmaker and now relies upon remote management, after several of its Chinese workers were refused work visas.
In an analysis, the Chinese publisher 36Kr said that geopolitical tension is only one aspect contributing to the changes in India’s business environment. It is important to note that Chinese companies must have adhered to Indian laws and hired local lawyers to present their case .
While some Chinese businesses are looking to leave India, other companies, such as Xiaomi, have decided that leaving is not an option, considering the long-term investment they made and their well-developed supply chain.
“Xiaomi simply cannot afford to leave India,” 36Kr said in its article.
Kathleen Li has contributed to The Epoch Times since 2009 and focuses on China-related topics. An engineer in Australia, she is chartered in structural and civil engineering.