China slams India's move to scrutinise FDI, calls it discriminatory

New Delhi effectively closed on Saturday the "automatic route" of investing for Chinese firms and individuals.

China has protested India's new changes to the Foreign Direct Investment (FDI) policy that mandate government approval for all investments by neighbouring countries, including China.

Two days back, New Delhi effectively closed the 'automatic route' of investing for Chinese firms and individuals. An increasing amount of funds had recently started to flow into the start-up, e-commerce and digital sectors in recent years through the route.

But on Monday, China retorted that this will make investments difficult. "As of December 2019, China’s cumulative investment in India has exceeded eight billion US dollars, far more than the total investments of India’s other border-sharing countries. The impact of the policy on Chinese investors is clear. 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," said Counsellor Ji Rong, spokesperson of the Chinese Embassy in India in a statement released by the Embassy in the afternoon.

India's northern neighbour has also pointed out the latest changes stand against global trading norms. "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 liberalization and facilitation of trade and investment. 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," reads the statement from the Chinese Embassy.

China has also batted for the rights of companies to choose where to invest based on market principles, economic fundamentals and business environment.

While the country has not made clear if it would challenge the new rules at international fora,it hoped India would 'revise relevant discriminatory practices, treat investments from different countries equally, and foster an open, fair and equitable business environment'. It is also yet to make an official representation on the issue either to the Commerce and Industry Ministry or the Ministry of External Affairs, said senior officials at both ministries.

The sudden move by the government has been attributed to rising possibilities of 'opportunistic takeover' of Indian companies by those in neighbouring nations as the currently ongoing COVID-19 pandemic wreaks havoc on the domestic economy. Till now, Chinese investments were automatically allowed, similar to those from other nations, in all but 16 sectors such as telecom, defence and national security. However, on Monday, China said that Chinese enterprises actively made donations to help India fight the Covid-19 pandemic. However, it did not give any figures in this regard.