India has seized $725 million from the local bank accounts of Chinese smartphone giant Xiaomi, which is accused of illegally sending money overseas under the guise of royalty payments, authorities said on Saturday.

India’s Financial Crimes Investigation Agency, which launched the investigation in February, said it seized the money after discovering that Xiaomi’s India branch had transferred funds to three entities based overseas.

“A very large amount in the name of royalties paid at the request of the Chinese parent company entity,” the agency said in a statement.

Xiaomi’s India branch denied these allegations late Saturday, confirming that these operations are “strictly compliant with local laws and regulations”.

“We are committed to working closely with government authorities to clarify any misunderstandings,” Xiaomi India tweeted.

The Indian firm’s offices were raided in December as part of a separate investigation into allegations of tax evasion.

Other Chinese smartphone makers, including Huawei, also have offices in India which were raided around this time.

Relations between New Delhi and Beijing are at their lowest since deadly clashes on the Himalayan border between armies from the two countries in 2020.

In the process, India’s Ministry of Home Affairs banned hundreds of Chinese mobile apps, including the popular platform Tiktok.

The government justifies banning these applications by the need to guard against threats to state sovereignty.

Anti-China sentiment has grown in India since 2020, prompting calls for a boycott of Chinese products.

However, China remains India’s main economic partner, with more than $125 billion in bilateral trade last year, according to local media.