- FDI from India's neighouring countries can happen only after government approval
- Chinese embassy has said the new rule violates WTO's principle of non-discrimination
- China's cumulative investment in India exceeded $8 billion till December 2019
The Chinese Embassy in India has criticised India's decision to restrict foreign direct investments from its neighbouring countries by making government approval mandatory. In a statement issued in Delhi on April 20, Ji Rong, spokesperson of the Chinese embassy in India said that the additional barriers set by India for investors from specific countries violate the WTO's principle of non-discrimination, and go against the general trend of liberalisation and facilitation of trade and investment.
The Chinese representative wanted India to revise "relevant discriminatory practices, treat investments from different countries equally, and foster an open, fair and equitable business environment". He also pointed out that India's fresh restrictions on FDI inflows do not conform to the consensus of G20 leaders and trade ministers to realise a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep the markets open.
According to Rong, companies choose to invest and operate on the basis of the country's economic fundamentals and business environment. "Facing the economic downturn caused by COVID-19, countries should work together to create a favourable investment environment to speed up the resumption of companies' production and operation", he said, adding that Chinese enterprises actively made donations to help India fight COVID-19.
On April 17, India tightened the FDI policy to prevent opportunistic takeovers or acquisitions of Indian companies due to the current COVID-19 pandemic. The restriction was specific to countries that share land borders with India and hence primarily targeting China.
The statement from the Chinese Embassy said that as of December 2019, China's cumulative investment in India has exceeded $8 billion, far more than the total investments of India's other border-sharing countries. Stating that the impact of the policy on Chinese investors is clear, it said Chinese investment has driven the development of India's industries, such as mobile phone, household electrical appliances, infrastructure and automobile, creating a large number of jobs in India, and promoting mutually beneficial and win-win cooperation.