SFIO Seeks Detailed Probe Into Xiaomi India’s Business Model

Xiaomi India could face a deeper regulatory investigation after the Serious Fraud Investigation

Office (SFIO) reportedly recommended a detailed probe into the smartphone maker’s business

model and compliance with India’s foreign investment rules. The proposal is currently being

examined by the government and would require approval from the Ministry of Corporate Affairs

before a formal investigation proceeds.

The proposed probe would examine several parts of Xiaomi’s India operations, including its

foreign investors and beneficial ownership, movement of funds between related entities and

whether mandatory government approvals were obtained for investments after India tightened

scrutiny of capital from neighbouring countries in 2020. Potential compliance with foreign direct

investment rules is also expected to form part of the examination.

SFIO has also reportedly recommended scrutiny of Xiaomi’s financial statements, auditor

reports and relationships with sellers and ecommerce platforms. One area under consideration

is whether preferential or exclusive smartphone launches through selected online marketplaces

were consistent with India’s FDI framework governing ecommerce businesses. The agency has

outlined a 21-point investigation framework and could summon company executives if a formal

probe is approved.

Xiaomi has said it has not received any notice or communication from SFIO and maintains that

it complies fully with Indian laws. The development adds to earlier regulatory disputes involving

the company. Indian authorities previously issued customs-duty notices seeking ₹653 crore,

while the Enforcement Directorate froze ₹5,551 crore of Xiaomi India funds in 2022 over alleged

overseas royalty payments — allegations the company has contested.

The latest recommendation therefore represents another layer of scrutiny rather than a finding

of wrongdoing. If the government approves the investigation, the focus could extend well

beyond individual transactions to how Xiaomi structured investment, ecommerce distribution

and financial relationships in one of its biggest overseas markets.