China's Xiaomi challenges $72M India tariff ruling

Xiaomi has challenged an Indian tax ruling that accused the company of evading $72 million in tariffs on royalty payments, in a case that could have broader implications for India’s contract manufacturing industry.

The Chinese smartphone maker, a major player in India’s mobile market, has traditionally relied on contract manufacturers in the country to import components from China, pay customs duties and assemble devices locally, News.Az reports, citing Reuters.

In November, an Indian tax tribunal ruled that the declared import values had been undervalued for at least three years leading up to 2020. The tribunal said the calculations failed to include royalties of 2% to 5% that Xiaomi paid to foreign technology firms such as Qualcomm for the use of their technologies in smartphone components.

In a challenge filed with the Supreme Court of India, Xiaomi argued that the tribunal erred in designating it as the “beneficial owner” of the imported components while simultaneously requiring it to pay tariffs on royalty payments. The company has asked the court to overturn the ruling.

According to legal filings dated January 15 and reviewed by Reuters, Xiaomi contends that the tribunal’s interpretation signals “an implicit mistrust of the entire contract manufacturing industry” and could disrupt established manufacturing practices in India.

The company said the decision “grievously injures the established practices of the manufacturing sector,” underscoring the broader stakes for multinational firms operating under India’s contract production framework.

News.Az 

By Nijat Babayev