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Last updated on: April 20, 2020 16:43 IST

India's new policy for foreign direct investment (FDI) from specific countries violate WTO's principle of non-discrimination and is against the general trend of free trade, a Chinese embassy spokesperson said on Monday.

IMAGE: Prime Minister Narendra Modi with Chinese President Xi Jinping. Photograph: @MEAPhotogallery/Flickr

The impact of the policy, introducing "additional barriers", was clear on Chinese investors, the official said, adding that 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 it mandatory to have prior clearance by the government 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.

India's decision to tighten norms for FDI came amid reports of China eyeing to take over several Indian entities following fall in their valuation following 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," Chinese embassy spokesperson Ji Rong 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 a border with India.

She said India's new policy will make it difficult for companies from countries sharing a land border with India, including China, to invest in India, adding that decisions by companies to invest depends 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.