India’s new rules on foreign investment violate the principles of non-discrimination of the WTO and opposed the principles of free and fair trade. This could provoke a new conflict in difficult relations between countries, a representative of the Chinese Embassy said to the reporters.

What India did?

India has tightened control over investments from companies based in neighbouring countries. It is widely believed to be an attempt to prevent the absorption of Chinese firms during an outbreak of coronavirus. As China economy is not affected much as per the reports, so they can exploit this opportunity to weaken others. This step is taken by India to keep the economy stable.

What is in the rules and why were they imposed?

The Indian government said changes to federal investment rules were designed to restrain the exploitation of immediate opportunities available for other countries. Through it did not mention China in its new policy statement.

Indian stock markets have fallen 25% since February 15 due to an outbreak of coronavirus and the introduction of internal blocking measures.

How is China affected?

“The impact of politics on Chinese investors is obvious,” said Ji Rong, representative of the Chinese Embassy in New Delhi, in a statement.

The representative of the Chinese embassy said that China hopes that India will revise the “discriminatory practices” and will treat investment from different countries equally.

As of December 2019, China’s total investment in India exceeded $ 8 billion, which is much more than the total investment of other countries neighbouring India.

What critics says:

It is believed that this would be a set back for the relationship which Prime Minister Modi and President Xi JinPing have tried to build over last few years.

Xi JinPing visited India last October and received a warm welcome from PM Modi which act as a sign that the two countries were paving the way for new trade and strategic relations.

Some experts said that this step could damage trade relations between the two countries, since it is obvious that the new policy is aimed at Chinese investment.