India’s anti-money laundering agency Enforcement Directorate claimed on Friday, May 19th, that it seized Rs 82.6m in a case against Pigeon Education Technology India Private Limited, a Bengaluru-based online education technology (ed-tech) firm.
According to an official statement issued on Friday, this raid was issued under provisions of the Foreign Exchange Management Act (FEMA), 1999. The ed-tech company offers online classes under the brand name Odaclass.
In April, the ED conducted searches against the group and the agency alleged that the ed-tech firm is fully owned by Chinese nationals. The agency also alleged that the profits made in that company were siphoned off to Hong Kong under the advertisement expenses charade.
These marketing expenses were allegedly siphoned to China and Hong Kong on the instructions of Liu Can, the Chinese director.
During the raid, it was confirmed that the company siphoned Rs 827.2m to China and Hong Kong, and could not produce any receipt as proof of service of any advertisement published against the claimed expense, ED stated.
The Indian director of the company, Vedanta Hamirwasia stated that the Chinese director instructed them that the advertisements were published through Google and Facebook. However, no confirmation or invoice raised by these platforms is submitted, the ED added.
In its statement, ED alleged that an investigation concluded that the company was fully owned and controlled by Chinese nationals. All the affairs of the company including financial decisions are taken by those located in China.
India has been lately cracking the whip on Chinese companies operating in India, while its bilateral trade with the neighbouring country has been rising constantly. The clash in eastern Ladakh’s Galwan Valley between Indian and Chinese soldiers in mid-2020 escalated tension between the two countries and New Delhi has taken a hardline stand against Chinese businesses.
China has raised an alarm on what India calls a routine crackdown on tax violations by Chinese companies. Beijing has been asking India to follow the World Trade Organization’s policies on market access and allow its businesses to run without intimidation from government agencies.
Earlier, the Indian government agencies had conducted raids on major Chinese mobile companies, while several ministries have raised barriers to prevent Chinese firms from taking part in any government project’s bidding process.