Days after the DPIIT amended the FDI policy to keep an eye on any opportunistic takeovers of Indian companies by investors from countries that share a land border with India, China today termed the move as against WTO’s rules.
Days after the Department of Industry and Internal Trade (DPIIT) amended the foreign direct investment (FDI) policy to keep an eye on any opportunistic takeovers or acquisitions of Indian companies by investors from countries that share a land border with India, China today termed the move as against WTO’s rules. Ji Rong, a Chinese embassy spokesperson in a statement claimed that the new FDI rules violated the World Trade Organisation’s principle of non-discrimination and are against the general trend of free trade. The revised FDI rules state that any foreign investment coming in from countries that share a land border with India will have to come through the government route and is no longer permitted under the automatic route.
Rong, in a statement published on the website of the Chinese Embassy in New Delhi, said that the newly introduced additional barriers were also against the consensus arrived at the G20 grouping to realize a free, fair, non-discriminatory and transparent environment for investment. “The additional barriers set by the 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,” he said. According to Rong, as of December 2019, China’s cumulative investment in India has exceeded 8 billion US dollars, far more than the total investments of India’s other border-sharing countries.
In 2019 at the G-20 leaders gathered in Osaka, Japan to realise a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment. It was also decided that markets will be kept open. “International trade and investment are important engines of growth, productivity, innovation, job creation and development,” the statement said.
India moved to tighten its FDI norms after Housing Development Finance Corporation, last week declared that Chiese central bank, the People’s Bank of China (PBOC) held 1.01% state in the company as of March 31, 2020. HDFC said that PBOC has been a long time shareholder in the company but so far the shareholding was below the 1% mark, which did not force HDFC to publish the shareholdings of the Chinese bank. Under the new FDI rules, no foreign direct investment will be allowed in any sector without government approval.