The ministry of corporate affairs will scrutinize auditor reports and has received information from unnamed sources that indicates potential violation including fraud, according to the documents. In the case of Vivo, an inquiry was sought in April to detect if there were “significant irregularities in ownership and financial reporting” while authorities were asked to study the books of ZTE and submit findings “on urgent basis,” according to the documents.
Representatives for ZTE and Vivo didn’t reply to emails seeking comment. An email to the spokesperson for the ministry of corporate affairs wasn’t answered.
India has tightened scrutiny of China-based firms since 2020, when the two nations saw the deadliest fighting in decades at the LAC.
Prime Minister Narendra Modi’s government has banned more than 200 mobile applications from Chinese providers, including shopping services from Alibaba Group Holding Ltd., the TikTok short video hit from ByteDance Ltd. and apps used on Xiaomi’s phones. This month the country’s anti-money-laundering agency took control of the bank accounts of Xiaomi Technology India for allegedly breaching foreign-exchange laws, a decision that was put on hold following a court order.
The ministry of corporate affairs has started the process of inspecting books of accounts of more than 500 Chinese companies, according to a person with knowledge of the matter.
Apart from ZTE and Vivo, this includes Xiaomi, Oppo, Huawei Technologies, several Indian units of Alibaba Group such as Alibaba.com India E-commerce Pvt. Ltd., and Alibaba Cloud (India) LLP, the person said, asking not to be identified as the details are private.
Representatives for Xiaomi, Oppo, Huawei and Alibaba didn’t reply to emails seeking comment.
The ministry, in some cases, has sent letters to the firms seeking details on directors, shareholders of the companies, ultimate beneficiaries and owners, while it is in the process of seeking similar details from the rest of the companies, the person said. A report is expected in July, the person added.
Once the inspection reports are ready, the ministry would decide on whether further investigation by the serious fraud office is needed, the person said.