Police in Yiwu, a trade hub in Zhejiang province close to Shanghai, shifted Shyamsunder Agrewal and Deepak Raheja to a hotel where two policemen were deployed to guard them.
Raheja told PTI over phone that they still apprehend trouble as a large crowd of locals had surrounded their hotel.
Indian officials said efforts were on to bring them to Shanghai.
The two, who complained of ill-treatment and torture ever since they were "kidnapped" on December 15, 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 local traders, who reportedly handed them over to the police, assert that they would let them go only after the dues amounting to several million Yuan are paid.
Indian diplomat S Balachandran was "manhandled" at a court and fainted as he tried to secure the release of the two traders on December 31, prompting India to lodge a protest. He is convalescing at a hospital in Shanghai.
Meanwhile, an advisory from the Indian Embassy in Beijing, cautioned Indian businessmen in dealing with traders in Yiwu, which has emerged as a major hub for commodities trading. "Indian traders and business men are hereby cautioned not to do business with Yiwu in Zhejiang province," a trade advisory posted on the Indian Embassy website said today.
"All people who have business/trade with Yiwu are cautioned against doing business there and all people who do not have business/trade with Yiwu are requested to be careful that they do not do business with Yiwu. Indian businessmen are cautioned to stay away from Yiwu," the advisory said.
According to unofficial estimates Indian businessmen bought over several billions of dollars worth of goods last year. Over 100 Indian businessmen live in Yiwu doing thriving business there.
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," it said.
"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," it said, without directly mentioning the detention of two Indians.