China slams India's new 'discriminatory' FDI policy; seeks revision
China on Monday said that India's new Foreign Direct Investment (FDI) policy is violative of international norms of free and fair trade. China has asked India to revise the "discriminatory" policy that restricts investors in neighboring countries from setting up businesses in India without the Centre's approval. The new policy is aimed at preventing "opportunistic takeovers" of Indian firms weakened by the coronavirus pandemic.
Chinese Embassy spokesperson Ji Rong said that India's new policy violates the World Trade Organization's principle of non-discrimination when countries should be working together against the economic downturn. It said the policy does not conform to the "consensus of G20 leaders and trade ministers to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open."
Ji said, "The additional barriers set by the Indian side for investors from specific countries violate WTO's principle of non-discrimination, and go against the general trend of liberalization and facilitation of trade and investment." He added, "We hope India would revise relevant discriminatory practices, treat investments from different countries equally, and foster an open, fair and equitable business environment."
India allows FDIs through the automatic mode—where government approval is not required—and the government mode, where individuals/firms need the government's nod to invest in India. On Saturday, India mandated that investments from neighboring countries that share land borders would now require government approval. The policy impacts investments from China, Nepal, Bhutan, and Myanmar. Investments from Pakistan and Bangladesh were already under its ambit.
India said the change in the FDI policy was aimed at preventing "opportunistic takeovers/acquisitions." The move came amid concerns that Chinese firms could take over vulnerable Indian corporates that have been weakened by the coronavirus pandemic. Earlier this month, the People's Bank of China (PBOC) had purchased a 1.01% stake in the mortgage lender Housing Development Finance Corporation (HDFC).