India’s revised FDI guidelines against WTO’s principle of non-discrimination and general trend of liberalisation, says China

20 April, 2020 | Priyanka Sharma

India-China hostility National

China has critiqued India's revised FDI guidelines by calling it discriminatory and against WTO's principle of non discrimination. The guidelines have been revised to prevent opportunistic takeover...

China has rebuked India’s new guidelines for Foreign Direct Investment as discriminatory and in violation of WTO’s principle of free and fair trade. Chinese embassy spokesperson Ji Rong said in a statement on Monday, April 20, that the additional barriers imposed by India for investors from specific countries violate the WTO’s principle of non-discrimination. Moreover, the move is against the general trend of liberalisation.

The reaction came in response to India’s decision to revise FDI rules to prevent opportunistic takeovers/acquisition of Indian companies, in the backdrop of the ongoing coronavirus pandemic. The revised rules state that an entity, which shares land border with India or where the beneficial owner of an investment into India is situated and is a citizen of any such country, can invest in India only through government’s route now.

Furthermore, the amendment ruled out that a citizen of Pakistan or an entity in Pakistan cannot invest in defence, space, atomic energy and other sectors/activities prohibited for foreign investment. They can invest in any other sector but under government’s route. The rule also applies to all the existing and planned investments by foreign firms.

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Interestingly, the call to impose restrictions on FDI policy was voiced by Congress leader Rahul Gandhi in response to People’s Bank Of China’s opportunistic investment in Housing Development Finance Corporation (HDFC). He had tweeted that the massive economic slowdown in India has made Indian corporates attractive targets for takeovers. The government must take steps to curb foreign entities to take control of any Indian corporate during a crisis like this. He later congratulated the government for taking note of his warning.

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