India arrests employee of Chinese phonemaker vivo

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New Delhi’s financial enforcement agency has arrested an employee of Chinese mobile phone company vivo, reigniting fears of a renewed crackdown on Chinese companies operating in India.

The overnight arrest comes more than a year after India’s Enforcement Directorate, which investigates financial crimes, raided vivo properties to probe claims of illegally remittance of funds from India to China, which the directorate said was equivalent to nearly half the company’s Rs1.2tn (£11.7bn) turnover.

India and China’s diplomatic relations have been tense since deadly clashes between soldiers along the Himalayan border in 2020 and, while trade has continued, India has retaliated economically by banning scores of Chinese apps from its market, including video app TikTok.

An Indian government official said the Enforcement Directorate had arrested four people linked to vivo, including a Chinese national. Another person with knowledge of the matter said one Chinese national was among those arrested. The Enforcement Directorate has not publicly commented.

Vivo said one of its employees had been arrested, without elaborating on their nationality. “The recent arrest deeply concerns us,” it said a statement to the FT. “We will exercise all available legal options”. Vivo added that it “firmly adheres to its ethical principles and remains dedicated to legal compliance”.

No information about the nature of charges has been made public.

Indian state agencies have also targeted Chinese mobile phone companies Oppo and Xiaomi in the past 18 months. They froze almost $700mn of Xiaomi’s assets. The Directorate of Revenue Intelligence, the tax enforcement agency, last year accused vivo of customs evasion. Vivo said at the time it was co-operating with authorities.

The raids led China’s embassy in New Delhi to complain that “frequent investigations by the Indian side into Chinese enterprises” was disrupting business.

Vivo, owned by BBK Electronics, is vying with Samsung for the biggest share of India’s mobile phone market, according to research firm Canalys. Vivo has grown its share in recent quarters even as sales have been sluggish.

Earlier this month, New Delhi police raided the homes of more than 40 reporters and other staff working at NewsClick, a news website which Indian officials said has carried Chinese propaganda.