India's new FDI norms violate WTO's principle of non-discrimination, says China; Seeks revision

China on Monday criticized India's new FDI norms as "discriminatory", and sought its revision while asking New Delhi to treat investments from different countries equally, fostering an "open, fair and equitable" business environment.

Asserting that the change in foreign direct investment (FDI) regulations has created "additional barriers" for investments from specific countries, and violates WTO's principle of non-discrimination, a spokesperson in Chinese embassy here said the impact of the policy was clear on the Chinese investors.

Last week, India made a prior clearance by the government mandatory for investments from countries that share land border with India, including China, to curb "opportunistic takeovers" of domestic firms following the coronavirus pandemic.

"The additional barriers set by Indian side for investors from specific countries violate WTO's principle of non-discrimination, and go against the general trend of liberalisation and facilitation of trade and investment," Chinese embassy spokesperson Ji Rong said in a statement.

More importantly, they do 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, she said.

"Companies make choices based on market principles. We hope India would revise relevant discriminatory practices, treat investments from different countries equally, and foster an open, fair and equitable business environment, she added.

There was no immediate reaction from the Indian side.

Ji also asserted that "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 mutual beneficial and win-win cooperation.

India's decision to tighten norms for FDI came amid reports of China eyeing to takeover several Indian entities following fall in their valuation after the economic downturn in the wake of the pandemic.

The embassy spokesperson said China's cumulative investment in India has exceeded USD 8 billion, noting it is far more than the total investments by countries sharing border with India. According to the official data, around 1,000 Chinese companies are operating in India at present.

She said India's new policy will make it difficult for companies from countries sharing land border with India, including China, to invest in this country, adding decisions by companies to invest depend on a country's economic fundamentals.

"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," she said.

The ballooning trade deficit in China's favour has also been a major issue for India.

The trade deficit in 2018, according to Chinese official data, climbed to USD 57.86 billion from USD 51.72 billion in 2017. India has been pressing China to import more Indian goods, especially pharmaceutical and IT products.