China has been upset over the recent changes in India’s Foreign Direct Investment (FDI) New FDI rules. He called it a violation of the core principles of the World Trade Organization (WTO).
China has said that it is discriminatory and against the rules of free trade without any discrimination. Beijing has also expressed hope that India will roll back this change soon.
The Government of India issued a guideline on Friday, saying that the direct route for FDI will not be used by people of countries whose borders meet India.
By using the direct route, a foreign company or person could invest directly in an Indian company and after that he could inform the Government of India. But now in the new rule, it will have to get the approval of the Government of India before investing.
There is already a rule in India that people of Pakistan, Bangladesh cannot invest in India without prior permission, in the new rule it will also come to China.
Overall, it means that no Chinese citizen or company can invest in an Indian company without the prior permission of the Government of India.
Observers say that the goal of this change is to protect domestic companies from Chinese takeover in the current economic crisis. It should not be that Chinese companies should buy Indian companies by taking advantage of the bad economic situation.