China has accused India of violating WTO principles of non-discrimination after New Delhi amended its FDI rules to curb "opportunistic takeovers" of Indian firms amid the coronavirus pandemic. In a statement issued on Monday, Chinese Embassy spokesperson Ji Rong alleged that the new foreign investment rules are against free and fair trade.
"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," the Chinese Embassy said in its statement.
The response from China came after the government on Saturday amended its extant Foreign Direct Investment (FDI) policy to stop "opportunistic takeovers or acquisition" of Indian companies due to the COVID-19 pandemic. The move had come days after Chinese central bank acquired stakes in the HDFC.
Now the Chinese are feeling offended as they accuse India of "discriminatory practices" and demanded New Delhi to revise them in order to foster an open and fair business atmosphere.
"We hope India would revise relevant discriminatory practices, treat investments from different countries equally, and foster an open, fair and equitable business environment," the statement read.
What new FDI rules say
According to the new FDI rules, a non-resident entity can invest in India, subject to FDI Policy except in those sectors which are prohibited. "The entity of a country, which shares a land border with India or where investment owner is situated in or is a citizen of any such country, can invest only under govt route," the new rules say.
Also, government approval will be needed for the transfer of ownership of any existing or future FDI in an Indian firm. "In the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the restriction/ purview of the para 3.1.1(a), such subsequent change in beneficial ownership will also require Government approval," a notification by Ministry of Commerce & Industry stated.