Xiaomi India Photo: VCG

Chinese smartphone maker Xiaomi on Saturday firmly denied Indian authorities' claim that the company funded an investigated news portal, calling the accusation "baseless," while Chinese experts slammed India's rising hostility toward Chinese firms as becoming "hysterical."

In a fresh move targeting Chinese companies, Indian police have formally accused Chinese smartphone makers Xiaomi and Vivo of helping transfer funds illegally to a news portal under investigation on charges of "spreading Chinese propaganda," Reuters reported on Friday. 

In response to the report, a Xiaomi India spokesperson told the Global Times on Saturday that "we have no knowledge about this. We strongly deny the said allegation against Xiaomi in the FIR," referring to the First Information Report, as the police complaint is formally called in India.

"Xiaomi conducts its business operations with utmost respect to, and in strict compliance of, applicable laws. Any allegation of conspiracy is completely baseless," the company said.

While the exact cause of this latest case remains unclear, it is yet another instance of India's ongoing crackdown on Chinese firms, Qian Feng, director of the research department at the National Strategy Institute of Tsinghua University, told the Global Times on Saturday, calling India's rising hostility toward Chinese firms as becoming "hysterical."

Chinese companies like Xiaomi and Vivo operate legally in India and have gained significant popularity among Indian consumers for their value-for-money products and services. These companies have also played a pivotal role in promoting the widespread adoption of mobile phones and mobile internet access in the South Asian market, according to Qian.

The latest move by the Indian side came just over a week after Indian income tax authorities conducted inspections at another Chinese firm, Lenovo's factory located in the union territory of Puducherry and one of its offices in Bengaluru city. This action was taken as part of a tax evasion investigation into Lenovo and certain affiliated entities, according to media reports. 

In June, India's financial crime agency said that notices had been issued to the Chinese smartphone manufacturer over alleged illegal remittances it made to foreign entities. About $670 million of Xiaomi's funds have reportedly been frozen by India's government since last year.

India's intensified scrutiny of Chinese enterprises has also gone as far as interference in the appointment of senior executives in Chinese companies.

"The intensified action taken by the Indian government will undoubtedly undermine market confidence, which has yet to recover due to an unfriendly approach toward foreign investors, including Chinese ones, characterized by heightened protectionism and politically-driven policies in the country," Qian said.

He said that if India continues down this path, it will not only damage the country's market confidence and business environment but also tarnish its international reputation.