RoC finalises report on Xiaomi, Vivo, Oppo; recommends detailed probe into fund diversion

Company Act empowers the MCA to carry out probe if there are reasons to believe that companies are violating the provisions

The Registrar of Companies (RoC) under the Ministry of Corporate Affairs (MCA) has finalised its probe into Chinese smartphone manufacturers Xiaomi, Vivo and Oppo over alleged financial impropriety. The report, submitted to the MCA, has recommended a detailed investigation into suspected fund transfers to other companies, government sources told Moneycontrol.

The report highlights concerns over potential fund diversion beyond these firms and indicates possible tax fraud, details of which have been shared with the goods and services tax (GST) department of the Central Board of Indirect Taxes and Customs as well as the Central Board of Direct Taxes (CBDT).

“RoC has submitted the report to the MCA and recommended a deeper probe. If there is scope, any fund transfer to other companies or institutions can be investigated. The findings are not limited to fund diversion but also cover tax evasion, tax fraud and other aspects,” a government official said.

The official added that the RoC report specifies the suspected amount involved and the areas of concern, including non-payment of direct and indirect taxes. “The MCA is likely to give a go-ahead for a detailed probe within a month. The findings will also be shared with the tax department,” the official added.

The MCA is likely to act on the findings and may even get the Serious Fraud Investigation Office (SFIO) involved, sources said. “MCA may decide to give the Vivo, Oppo, Xiaomi probe to SFIO depending upon complexities and quantum,” the government official told Moneycontrol.

Moneycontrol has reached out to the companies for their comments, which will be incorporated once received.

The Companies Act empowers the MCA to initiate probes if there is reason to believe that firms are violating legal provisions.

The current scrutiny is part of the government’s broader efforts to enforce stricter compliance measures on foreign firms operating in India, particularly those with Chinese links allegedly involved in financial misconduct, such as money laundering and tax evasion.. Authorities have been increasing regulatory oversight, citing concerns over economic security, trade practices and financial accountability.

Past tax evasion concerns

This is an ongoing campaign. In July 2023, the then Minister of State for Electronics and Information Technology Rajeev Chandrasekhar had said that Oppo, Vivo and Xiaomi had collectively evaded taxes worth Rs 9,000 crore by dodging customs duties and GST.

According to data presented in Parliament, Oppo evaded customs duties amounting to Rs 4,403 crore between 2017 and 2021, while Xiaomi failed to pay a total of Rs 653 crore in taxes during the financial year 2019-20. Between 2018-19 and 2022-23, major Chinese smartphone makers, including Xiaomi, Vivo and Oppo, were found to have evaded duties and made illegal remittances from India.

Finance Minister Nirmala Sitharaman, in an August 2, 2022, response to the Rajya Sabha, had confirmed that these three companies were under investigation for duty evasion and alleged remittances of sales proceeds to entities outside India.