Why Xiaomi's business in India may face detailed probe
What's the story
India's Serious Fraud Investigation Office (SFIO) has recommended a detailed probe into Xiaomi's business operations in the country. The recommendation comes amid allegations of irregularities in its business model and potential violations of foreign investment rules. The proposed probe will look into fund movements and whether Xiaomi got necessary approvals for investments in India after stricter scrutiny of Chinese investments was introduced in 2020.
Investigation scope
Proposed investigation to cover foreign investors and group companies
The proposed investigation will also look into the ownership and control of Xiaomi's foreign investors and group companies.
It will check if any direct or indirect ownership, control, or changes in control were properly disclosed and approved.
The probe covers Xiaomi Technology India Private Limited and its related entities. However, it is still awaiting approval from the Ministry of Corporate Affairs.
Claim
Xiaomi maintains its compliance with Indian laws
The SFIO, which is India's main agency for probing corporate fraud, has the power to arrest and prosecute offenders.
However, Xiaomi has said that it hasn't received any notice or communication from the SFIO and maintains its compliance with Indian laws.
The company has been unable to overturn a freeze on ₹5,551 crore in its Indian bank assets since 2022 over alleged illegal remittances.
Market challenges
Decline in market share and revenue
Xiaomi has also witnessed a decline in its market share in India. The company holds 13% of the smartphone market, down from 19% earlier, as per Counterpoint Research. Its India revenue stood at $2.52 billion in 2025, a whopping 40% drop from three years ago.
Online sales
Investigation to look into online sales through Amazon, Flipkart
The SFIO's recommendation for an investigation is based on complaints and inputs received through the government's commerce ministry.
The memorandum outlines a 21-point framework covering the scope, methodology, and proposed course of the investigation. It also allows for summoning company executives if required.
The proposed probe also covers Xiaomi's online sales through Amazon and Flipkart amid allegations of exclusive arrangements with sellers in violation of India's foreign investment rules for e-commerce.