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The Indian government has seized roughly $60 million across 199 of Vivo’s bank accounts, following in the footsteps of similar investigations against Xiaomi earlier this year

This week, the Indian government has conducted searches at more than 40 of Vivo’s locations in India, following allegations that the Chinese smartphone maker was participating in money laundering. 

As part of the raids, roughly $60 million has been seized and 199 of Vivo’s bank accounts have been frozen.

The investigations have been taking place since at least April, when reports noted that India’s Enforcement Directorate (ED) was seeking to probe the company’s “significant irregularities in ownership and financial reporting”. 

The Directorate alleges that sale proceedings from Vivo’s Indian unit were transferred out of the country, thereby allowing the unit to report losses in India and avoid related tax payments. The Directorate believes that almost half of the company’s $15.82 billion in Indian revenues was sent back to China, some or all of it illegally.

This is not the first time the ED has challenged Chinese smartphone makers over their financials in recent months. Back in May, the ED seized around $730 million from China’s Xiaomi, claiming that the vendor had made similar “illegal remittances”.

Both Vivo and Xiaomi profess their innocence and are currently cooperating with the Indian government throughout these investigations. 

These financial probes are taking place against a backdrop of considerable tension between India and China. Deadly clashes in the Kashmir region back in 2020 have led to increasingly thorny relations between the two nations, gradually manifesting as various policies that directly or indirectly target Chinese enterprises.

In the past two years, India has banned 321 Chinese apps and has also passed laws excluding China’s radio equipment manufacturers, Huawei and ZTE, from participating in the nation’s 5G trials, citing security concerns in both cases.

But more than just a matter of national security, India has also been trying to week itself off its economic reliance on China, one of its key trading partners. When it comes to smartphones, for example, Chinese manufacturers control roughly three-quarters of the Indian market; according to Counterpoint Research, Vivo and Xiaomi account for roughly 15% and 24% of the market, while Samsung is the third major player with 18%. 

In fact, the Indian government has in recent years launched numerous initiatives to help support and expand the country’s key domestic industries, building on the Made in India initiative. The tech and telecoms industries are both clear beneficiaries of this policy drive, with the government giving major incentives for domestic semiconductor manufacturing and even pushing for the creation of its own 5G standard, known as 5Gi.  

This could open the door to enterprising Indian companies to launch their own products in an otherwise highly competitive market, potentially siphoning off a portion of the market while major Chinese firms are under increasing scrutiny. Indian telecoms giant Reliance Jio, for example, already appears well positioned in this regard, having already announced that it is creating its own 5G telecoms hardware, as well as having released its own smartphone, the JioPhone, in summer last year. 
 

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