India's financial crime-fighting agency has arrested two senior employees working for Chinese smartphone maker Vivo's India unit, a source directly involved with the case said on Saturday, which the company vowed to challenge legally.

The arrests come two months after the Enforcement Directorate arrested four industry executives, including one Chinese national, working for Vivo's Indian unit in a case of alleged money laundering, charges the firm has denied. India has stepped up scrutiny of Chinese businesses and investments following a deadly border clash in 2020.

"We are deeply alarmed by the current action of the authorities," said a Vivo spokesperson. "The recent arrests demonstrate continued harassment and as such induce an environment of uncertainty amongst the wider industry landscape. We are resolute in using all legal avenues to address and challenge these accusations."

The individuals arrested were brought to a Delhi court on Saturday and were then sent to the agency's custody, said the source, who declined to be named as they were not authorised to talk to the media. An Enforcement Directorate spokesperson did not immediately respond to a request for comment.

The Vivo employees, whose identity Reuters could not confirm, will next appear in court on Dec 26, the source added.

  - Reuters