S Balachandran, from the Indian consulate in Shanghai, had to be hospitalised after attending a court hearing in Yiwu town that lasted five hours without being able to treat his condition, an Indian government source said.

But Chinese Foreign Ministry spokesman Hong Lei denied the diplomat was prevented from treating his diabetes.

Relevant media reports that the Indian consular official from Shanghai was forbidden from eating or taking his medication while in Yiwu and was surrounded and attacked do not accord with the facts, Hong said, without offering his own account.

China is a country ruled by laws, which pays great attention to relations with India, he added.

The diplomat was in Yiwu for an individual case about an economic dispute, Hong said, adding that the matter was handled in accordance with the law.

Hong said the two Indian businessmen involved in the hearing were staying in a hotel under police protection, and had freedom of movement. Police had detained five other people on suspicion of illegal detention, he said, without elaborating.

China hopes that India treats this matter objectively and fairly, he added.

Yiwu is a small city in eastern China known for manufacturing and a commodities wholesale market that attracts traders from across Asia.