Oppo: Xiaomi, Oppo, Vivo and Lenovo under probe over alleged GST evasion

The government has initiated investigations against and issued show cause notices to top Chinese smartphone brands such as Xiaomi, Oppo, Vivo and PC maker Lenovo for alleged GST evasion, and are persuading them to deposit the amount, interest and penalties, as applicable.In response to an unstarred question in the Rajya Sabha, minister of state for electronics and IT, Rajeev Chandrasekhar outlined the amount of GST and customs evaded by the top Chinese smartphone brands from 2017 to July 2023, along with the amounts recovered and the action taken.

Xiaomi India has been issued multiple show cause notices for customs duty evasion in FY20, FY21, and FY22, adding to a cumulative amount of Rs 682.51 crore, of which the government has recovered Rs 10.76 crore, according to the written response to the upper house of parliament. The company also paid Rs 31.77 lakhs in interest and penalty of Rs 13.3 lakhs in FY20 for evading customs duty.

The company is also being investigated for GST evasion from 2017 to July 2023 to the tune of Rs 168.63 crore, with Rs 82.04 crore recovered by the government so far, the minister said.

He added that Oppo had evaded customs duty to the tune of Rs 4403.27 crore in FY20 and FY21, with the government having recovered Rs 476.79 crore from the company along with issuing show cause notices. The government has also detected GST evasion to the tune of Rs 683.04 crore by Oppo, and has recovered Rs 738.04 crore.

Vivo, another top Chinese smartphone brand in India, has been accused of evading Rs 2875 crore in customs duties in FY21 and FY23, with the government recovering Rs 117 crore from the company for the same. In terms of GST, the minister said the company has evaded Rs 48.25 crore, with part of the evasion still being processed. So far, the government has recovered Rs 51.25 crore from the company for the same.

PC brand Lenovo, which also operates the Motorola brand in India, has also been charged with GST evasion to the tune of Rs 42.36 crore, with recovery yet to happen, the minister said.

Xiaomi, Oppo, Vivo, and Motorola did not respond to ET’s emails seeking comments.

The development comes amidst an intense scrutiny on Chinese smartphone brands operating in India ever since the border skirmish between Indian and Chinese forces in 2020, with multiple raids at their premises by investigative agencies and interrogations of top officials.

The enforcement directorate has alleged that’s Xiaomi India violated India’s foreign exchange rules by remitting over Rs 5500 crore abroad under the guise of royalties, apart from charges by the income tax department for tax evasion.

Oppo has also been accused of customs duty evasion by the Directorate of Revenue Intelligence, while Vivo has been accused of money laundering with over Rs 465 crore seized from its bank accounts.

All three companies have denied any wrong doing and taken the government to court with regards to these charges.

The minister, in his written response, said the major Chinese mobile handset brands — Oppo, Vivo, Xiaomi, Transsion, Realme, and OnePlus had a cumulative turnover of Rs 1.5 lakh crore in FY2022 in India, employing over 75,000 people directly for manufacturing, and another 80,000 in sales and operations.

He said that some of the Chinese companies have setup their own manufacturing units while others work through contract manufacturers like Bharat FIH and DBG technology. The distribution of mobile handsets are mainly handled by Indian companies, with some companies like Oppo and Vivo are doing so through Chinese distributors.

The minister also outlined the steps the government has taken to promote and deepen the electronic manufacturing ecosystem in India, highlighting the production-linked incentive (PLI) scheme for large electronics, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), among others.