Additional trade barriers violate WTO’s principle of non-discrimination: China

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India’s recently adopted policy to curb opportunistic takeovers of domestic companies goes against the principles of the World Trade Organisation (WTO), the spokesperson of the Chinese Embassy in India said on Monday. This is the first response from the Chinese side after the Ministry of Commerce and Industry in an April 17 decision imposed restrictions saying companies from countries that share borders with India can invest “only under the government route”.

“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. More importantly, they do not conform to the consensus of the G20 leaders and Trade Ministers to realise a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open,” said Counsellor Ji Rong, spokesperson of the Chinese Embassy in India.

The Indian policy revision is meant for sectors and enterprises other than defence, space, atomic energy and sectors and activities “prohibited for foreign investment”. It was understood that the Indian decision was a response to the news of an incremental purchase of shares in HDFC by the People’s Bank of China.

Free market economy

The Chinese spokesperson invoked the principle of free market economy and said, “Companies make choices based on market principles. We hope India would revise relevant discriminatory practices, treat investments from different countries equally, and foster an open, fair and equitable business environment”.

Analysts have pointed out that the amended policy brings every kind of Chinese investors to India within the ambit of government approval reducing the space for private business negotiations. Analyst Santosh Pai had stated that the decision would face difficulties, especially if the government tried to attribute nationality to venture capital funds.

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