Why was the MD of Indian smartphone maker Lava arrested and why has it concerned the MoS for information technology Rajeev Chandrasekhar? It all started with Lava’s alleged business with Chinese smartphone maker Vivo.
Hari Om Rai, co-founder, chairman, and managing director of Lava International was arrested on Wednesday along with three others associated with Vivo over money-laundering charges.
As per the charges filed by the Enforcement Directorate (ED), Vivo officials had approached the Lava MD to help them establish their business in India.
It said that Vivo’s officials offered Rai an initial funding of Rs 3.17 crore to set up offices and residential accommodation for Chinese national of Vivo Mobile India Pvt Ltd and its state distributors via Labquest Engineering Private Limited.
ED has further accused Vivo of transferring over Rs 1 lakh crore outside India. The agency noted that the company had shown zero profit from 2014 to 2020 and no income tax was paid to India.
Minister Chandrasekhar said that Rai’s arrest is a matter of concern given that the phone maker is a leading brand in India.
Lava International is a beneficiary of the Government of India’s production-linked incentive (PLI) scheme for domestic smartphone manufacturing.
“We are obviously very concerned about it. We do not know all the facts, but Lava as a company has been an Indian champion in the important and growing smartphone segment, where India is now becoming one of the world’s largest producers of smartphones. As a brand, we hold Lava to be a very important participant in the smartphone ecosystem, and while I do not know all the facts about it, I hope this is rapidly looked into, and that the right thing is done by Lava and Rai,” Chandrasekhar said on Thursday, according to a report by MoneyControl.
ED has also accused Vivo officials of breaching visa rules. It said that at least 30 Chinese people came to India on business visas as Vivo employees.
“Various Chinese nationals have been traveling across India, including sensitive places of Jammu and Kashmir and Ladakh, in gross violation of Indian visa conditions,” it added.
Vivo has been embroiled in money laundering charges for quite some time now. In July 2022, the ED conducted raids at Vivo offices and alleged that Rs 62,476 crore was “illegally” transferred by Vivo to China to avoid payment of taxes in India.