China on Monday said that India’s new rules for Foreign Direct Investment from specific countries violated the World Trade Organization’s principle of non-discrimination and were against free trade. Last week, the Centre had tightened norms for Foreign Direct Investment in India from neighbouring countries, with a view to curb “opportunistic takeovers or acquisitions” of Indian companies due to the coronavirus pandemic.

“The additional barriers set by Indian side for investors from specific countries violate WTO’s [World Trade Organization’s] principle of non-discrimination, and go against the general trend of liberalization and facilitation of trade and investment,” Chinese embassy spokesperson Ji Rong said in a statement.

“More importantly, they do not conform to the consensus of G20 leaders and trade ministers to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open,” she added.

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The spokesperson urged India to reconsider its FDI policy. “We hope India would revise relevant discriminatory practices, treat investments from different countries equally, and foster an open, fair and equitable business environment,” she said.

On Saturday, the Centre had issued a notification saying that companies from countries that share a border with India will have to approach the government for investments, and not go the automatic route. FDI in India is allowed through two routes – automatic, where companies don’t require approval from the government, and government, where companies need the Centre’s approval.

The earlier FDI policy made it compulsory only for Bangladesh and Pakistan to invest via the government route. The new policy brings China, Nepal, Bhutan and Myanmar also into the ambit.

The government had added that a citizen of Pakistan or an entity incorporated in Pakistan can invest in activities other than defence, space, atomic energy and other sectors where FDI is allowed, only through the government route.