The CEO of Huawei’s Indian operation, Xiongwei Li, has been given permission to appeal a travel ban imposed by India’s tax authorities.
The ban was implemented by India’s Income Tax Department after February 2022 raids on the Chinese company’s local offices looking for information on its tax affairs.
Indian authorities allege that Huawei’s local arm has sent millions to China, disguised the true nature of its finances, and not paid all taxes. While investigations proceeded, the Income Tax Department issued a circular that prevented Li from traveling outside India.
The CEO sought to have the circular struck down, and on Tuesday the High Court of Delhi ruled [PDF] that he can have his day in court – preferably within four weeks.
Meanwhile Li remains grounded in India, and the tax probe continues.
India alleges that Huawei sent around $94 million to China as part of efforts to understate income and thereby avoid paying taxes.
Taxation authorities have made similar claims about Chinese smartphone maker Vivo and consumer electronics company Xiaomi. Another Chinese smartphone maker, Oppo, has also been accused of improper financial conduct
Perhaps coincidentally, those very same three brands enjoy considerable market share in India.
India also seeks self-sufficiency in all things technological, including smartphones. The nation’s drive to serve its own needs sees it argue that manufacturers with local facilities can both better address the giant local market and diversify their operations – so that future shocks such as a global pandemic or increased geopolitical tension don’t leave them unhelpfully reliant on China.
That happy confluence of motivations has led some to conclude that India may be not merely ensuring it is paid the taxes it is due but also conducting an economic offensive against China by making life harder for its tech companies.
India, to be fair, likes to make hard for almost all foreign tech companies – Google, Facebook, Amazon and Twitter have all recently found themselves under investigation or pressured over the validity of their compliance with local law. Yet all is usually forgiven – for a while at least – when foreign companies make big investments in India. ®