India's new FDI norms violate WTO's principle of non-discrimination: China

India's new norms featuring "additional barriers" for foreign direct investment from specific countries violate WTO's principle of non-discrimination and are against the general trend of free trade, a Chinese embassy spokesperson said here on Monday.

The impact of the policy was clear on Chinese investors, the official said, adding India's action was also against the consensus arrived at the G20 to realise a free, fair and non-discriminatory environment for investment.

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

Chinese embassy spokesperson Ji Rong said China hoped that India would revise the "relevant discriminatory practices" and treat investments from different countries equally while fostering an "open, fair and equitable" business environment.

There was no immediate reaction from the government on the comments by the Chinese embassy spokesperson on the issue.

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 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," the spokesperson said in a statement.

She said China hoped that India would revise the "relevant discriminatory practices" and treat investments from different countries equally while fostering an "open, fair and equitable" business environment.

"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," Ji said.

The 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 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 India, 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.