In a case that highlights the perils that await foreigners doing business in China, two Indian traders who were allegedly beaten and detained for two weeks by Chinese businessmen are set to stand trial, accused of owing $1.58 million in debts after their Yemeni boss fled, according to news reports.

Deepak Raheja and Shyamsunder Agarwal were reportedly seized Dec. 14 in the eastern Chinese city of Yiwu, a massive trading center, and held captive in a hotel by local businessmen demanding to be paid back.

It wasn’t until Indian officials arrived that the two were released. They were taken to a Shanghai hospital, where they were reportedly found to have internal injuries.

In a peculiar twist before their arrival in Shanghai, an Indian diplomat was caught trying to sneak Raheja and Agarwal out of a Yiwu court hearing under the pretense of going to the toilet, the Chinese state-owned Global Times reported Thursday.


The diplomat, identified as S. Balachandran, reportedly fainted and alleged he was harassed and denied food and water.

Hong Lei, China’s Ministry of Foreign Affairs spokesman, disputed the allegations in a news conference Wednesday, saying, “The reports did not tally with the facts.”

Lei added: “China protects the rights and interests of foreigners doing legitimate business.”

The Indian Embassy has told its citizens to refrain from doing business in Yiwu, a city with 130,000 foreign business people, the Global Times said.


The controversy complicates an already wary relationship between China and India, two massive emerging economies set to compete for financial and military influence.

Pragmatism may win the day as Beijing and New Delhi are intertwined in $60 billion worth of annual trade. The Indian government has said it won’t intervene in the Yiwu dispute once it reaches the courts, but asked that the two traders be afforded fair legal treatment, according to the Hindu, a newspaper.

“China is a huge country and in certain provinces, we have been looted and cheated many times. But we are overtly dependent on China as Indian customers seek cheap products, which are only available in China,” Jayesh Patel, marketing director of A Innovation International, told India’s Daily News & Analysis.