The Indian embassy in Beijing on Tuesday urged its nationals not to do business in the eastern Chinese city of Yiwu after reports that two Indians there were "mistreated" over allegedly unpaid bills.

The incident triggered an official complaint from India after a diplomat called S. Balachandran was manhandled during a court case in Yiwu over the weekend in which he was trying to secure the release of the two traders.

"Indian traders and businessmen are hereby cautioned not to do business with Yiwu in Zhejiang province," the embassy said in a statement on its website.

"They should be aware that when there are trade disputes with Yiwu, the Indian businessmen/traders can be illegally held under detention and mistreated by Chinese businessmen there.

"Based on experience, there is no guarantee that legal remedies will be readily available. Furthermore, in case of disputes arising, experience suggests that there is inadequate protection for safety of persons."

Yiwu is home to the world's largest wholesale market for consumer goods.

A spokesman for the Indian embassy said the advisory was in response to an incident involving two traders in Yiwu, but would not comment further. The consulate-general in Shanghai would not provide any details either.

Calls to China's commerce ministry, as well as the government, Communist Party committee and police in Yiwu went unanswered. A spokeswoman for the foreign ministry would not immediately comment on the issue.

But according to the Press Trust of India news agency, who spoke to one of the traders over the phone, the two were "virtually held captive by local traders" in Yiwu before being handed over to police.

"The two... said they were merely employees of a company that owed payments to local suppliers for the goods purchased and that their owner, whose identity has not been established, had fled," the report said.

An Indian government official, who declined to be named, told AFP Monday the foreign ministry had summoned Zhang Yue, Beijing's deputy chief of mission in New Delhi, to complain about the courtroom assault.

Despite growing trade ties, relations between China and India have often been fraught and both fast-developing countries remain suspicious of each other as they compete for resources and influence overseas.