Indian authorities confiscated $725 million in bank accounts of Xiaomi India. The state-run Enforcement Directorate said the Indian branch of the Chinese manufacturer transferred its Indian rupee equivalent to three foreign entities in violation of currency laws.

The management said that a large amount of fees was transferred by Xiaomi Technology India Private Limited on the instructions of its Chinese parent companies. This was done “for the ultimate benefit of Xiaomi Group” in violation of paragraph 4 of the 1999 Foreign Exchange Management Act. It prohibits such transactions.

Xiaomi India has issued a response stating that all royalty payments and bank statements are legal and truthful. The royalties stated by the government agency Enforcement Directorate were for the licensed technologies and intellectual property used in the Indian version of Xiaomi products.

Xiaomi India said it would like to “work closely with government agencies to resolve any misunderstandings”.