SUMMARY
The revenue intelligence arm of the finance ministry has alleged misdeclaration of the device models and their value
The India Cellular and Electronics Association (ICEA) has called the government agency’s actions ‘unilateral and preposterous’
The current clash between India and Vivo comes shortly after the government’s increased scrutiny of 46+ Chinese companies
The revenue intelligence arm of the finance ministry has stalled the export of 27,000 Vivo phones from India worth $15 Mn. According to a Bloomberg report, the finance ministry has alleged misdeclaration of the device models and their value and thus, has stopped the Chinese smartphone maker from shipping the devices from India to neighbouring markets.
The report further quoted an industry lobby group – the India Cellular and Electronics Association (ICEA) – calling the government agency’s actions ‘unilateral and preposterous’.
“We request your kind and urgent intervention to stop this unfortunate course of action,” ICEA chairman Pankaj Mohindroo wrote to the finance ministry. “Such unwarranted actions by enforcement agencies will diffuse the drive and motivation to encourage electronics manufacturing and exports from India.”
The current export clash between India and Vivo comes shortly after the government’s increased scrutiny of Chinese companies including SAIC’s MG Motor, Xiaomi, ZTE, Oppo and more. According to the finance minister, the Central Board of Indirect Taxes & Customs (CBIC) has registered cases against 43 mobile and equipment manufacturing companies between 2019 and 2022.
Recently, Vivo also found itself in more regulatory trouble with the directorate of revenue intelligence (DRI) with allegations of evading customs duty liability of around INR 2,217 Cr.
Vivo is already under scrutiny for alleged money laundering where an ED investigation revealed that Vivo remitted INR 62,476 Cr to entities outside the country – mainly in China – to reduce its tax liability in India significantly. Vivo sold phones worth INR 1.25 Lakh Cr between July 2017 and March 2021.
The government has issued three show-cause notices to Vivo, with an approximate INR 653 Cr duty liability of which Vivo has deposited only INR 46 Lakh.
The ED froze its bank accounts and called Vivo’s actions an act of ‘financial terrorism’.
The Chinese embassy, on the other hand, has called out India’s singling out Chinese companies an act of ‘poor goodwill’.
