India’s new rules for foreign investment contravene WTO principles of non-discrimination, and are against free and fair trade, a Chinese embassy spokesperson said yesterday, potentially opening a new flashpoint in the nations’ uneasy ties.
India on Saturday stepped up scrutiny of investments from companies based in neighboring nations, in what was widely seen as a move to stave off takeovers by Chinese firms during the COVID-19 pandemic.
The changes to federal rules on investment were meant to curb opportunistic takeovers and acquisitions, the Indian government said, but it did not mention China in its policy statement.
In a global rout triggered by the pandemic and the imposition of national lockdown measures, Indian stock markets have fallen 25 percent since Feb. 15, wiping out tens of billions of dollars.
“The impact of the policy on Chinese investors is clear,” Chinese embassy in New Delhi spokesman Ji Rong (嵇蓉) said in a statement.
As of December last year, China’s cumulative investment in India has exceeded US$8 billion, far more than the total investments of India’s other neighboring nations, the statement said.
The move could set back attempts by Indian Prime Minister Narendra Modi and Chinese President Xi Jinping (習近平) to improve ties between the two nations, which fought a war over border issues in 1962.
China hopes the Indian government would revise its “discriminatory practices” and treat investments from different nations equally, Ji said.
Some experts said that the move could hurt the trade relationship between the two nations as it is clear that the new policy is directed toward Chinese investment.
“It appears that the [Indian] government feels that if China’s money-pumping goes unchecked, it could have [a] drastic impact on [the] ownership of assets in the country,” said Nikhil Narendran, a partner in Indian law firm Trilegal.
“This will definitely have trade implications,” Narendran said, adding it could also make it harder for Indian start-ups to raise money.
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