A depreciation in the Yuan will result in an increase of Chinese exports as where countries compete on price for goods like steel and tires the demand is very elastic. A small change in price will lead to a large shift in the quantity demanded. India knows this and after a succession of poor last few months exports will stand to lose out even more now that the Yuan has devalued.
Also now that China has changed its exchange rate, China could be leaning to a more flexible exchange rate (which the article suggests) opening up for an increase in capital mobility which investors look favourably upon. The devaluation of the yuan has also decreased the price of Chinese assets thus making it cheaper to invest.
It is likely that the further reduction of the price of Chinese exports will cause the currency to appreciate once again as demand for Chinese goods increases. Some investors will take on Chinese assets and currency, predicting the currency will appreciate in the future, resulting in a nice profit.
Finally as India's export reliant sectors struggle to compete with supplying major industries around the world, the drop in market share will be swallowed up by China resulting in more attractive Chinese businesses (which may be open to FDI). India is also struggling to supply its domestic industries as it cannot compete on prices. This uncertainty around India and its lacklustre performance will likely see FDI being pulled out and reinvested into more lucrative opportunities.