The woman surnamed Wang and her boyfriend had illegally detained Muhammad Danish Qureshi at Wang`s home since last Monday, state-run news agency Xinhua reported quoting local police as saying.
Police freed Qureshi, a "purchaser working for an Indian businessman named Faisal from his illegal detention" on May 23, the report said.
He was reportedly picked from a restaurant on May 19. Qureshi was in good health, and he left the public security department after being questioned by police, the report said.
Wang, 30 has been taken into police custody for illegally detaining the Indian following a debt dispute in Yiwu, it quoted local police as saying.
The report said Faisal, who is in Mumbai owned considerable amount of money to her and had ignored her requests to pay back.
In late 2009, Faisal hired Wang and one of her classmates to purchase goods in Yiwu, the world`s largest wholesale market for small consumer goods.
After Wang`s attempts to contact Faisal via e-mail and phone went unanswered, she learnt that Qureshi had been sent to Yiwu by Faisal on March 9.
She went to him for help in obtaining the money owed to her by Faisal, but received no response, and following this she and her aide abducted the Indian and called her boss asking for money, it said.
As of August 2011, Faisal had defaulted on service fees of 50,000 yuan (USD 7,900) and payments for goods valued at 400,000 yuan (about USD 64000) which Wang and her classmate paid for with their own savings, the report said.
After that Wang and her boyfriend held Qureshi in Wang`s apartment and called Faisal about the debt. There was no physical confrontation during the illegal detention, the report said.
No details were given about Wang`s boyfriend and his nationality.
Qureshi, also hailing from Mumbai, was found after Indian officials lodged a complaint to Chinese Foreign Ministry about Qureshi`s disappearance following pleas from his mother, who called the Indian Consulate and sought its assistance to trace him.
According to an Indian official, Qureshi was maltreated during the kidnapping.
He was the third Indian to have been held in illegal custody in Yiwu since early this year.
Two Indians, Shyam Sunder Agrawal and Deepak Raheja, who claim to be employees of a trade firm run by a Yemenese national, were released from such a detention in January and are still fighting their case. Qureshi was considered lucky to have been allowed to go home.
Over 100 Indian businessmen stay in Yiwu even after two stern advisories put out by the Indian Embassy here warning them about prevalence of extra judicial methods and lengthy and questionable judicial process in case of any dispute with the local businessmen.
There was a sense of exasperation among Indian officials here about the attitude of the Indian businessmen in Yiwu.
While they took risks in pursuits of profits shipping cheap Chinese goods into Indian markets, their families cry foul when things go wrong, the officials said.