Recently, India, along with South Africa, Türkiye, and several other developing countries, strongly opposed the proposed Investment Facilitation for Development (IFD) Agreement at the World Trade Organization. The agreement, largely backed by China, aims to simplify and streamline investment-related procedures across participating countries.
India’s opposition reflects concerns related to the preservation of the WTO’s multilateral framework, protection of sovereign policymaking powers, safeguarding food security interests, and addressing broader geopolitical considerations. India believes that while facilitating investment is important, it should not weaken the institutional foundations of the WTO or undermine the interests of developing nations.
What is the Investment Facilitation for Development (IFD) Agreement?
Background of the Agreement
The Investment Facilitation for Development (IFD) Agreement was launched in 2017 by a group of developing and least-developed countries led by China. The initiative seeks to create a global framework that makes investment procedures easier, faster, and more transparent.
The agreement is intended to improve the global business environment by reducing bureaucratic delays, simplifying administrative processes, and helping investors establish and expand businesses more efficiently in participating countries.
Supporters of the agreement argue that easier investment procedures can increase Foreign Direct Investment (FDI) flows into developing economies and contribute to economic growth and employment generation.
Nature and Features of the Agreement
One of the most important aspects of the IFD Agreement is its plurilateral character. Unlike traditional WTO agreements that require approval from all members, the IFD Agreement would be legally binding only on those countries that voluntarily choose to join it.
The proponents of the agreement maintain that it excludes controversial matters such as:
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Market access
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Investment protection
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Investor-State Dispute Settlement (ISDS)
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Government procurement
According to supporters, the agreement only focuses on improving procedural efficiency and transparency in investment regulations.
However, despite these assurances, India and several other countries remain skeptical about its long-term implications.
India’s Concerns Regarding the IFD Agreement
Concern Over Expansion of WTO’s Mandate
India argues that investment facilitation is fundamentally a non-trade issue and therefore falls outside the core mandate of the World Trade Organization.
The WTO was originally established to regulate:
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International trade in goods
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Trade in services
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Intellectual property rights
According to India, expanding the WTO’s jurisdiction into the regulation of foreign investment without unanimous consent violates the spirit of the Marrakesh Agreement, which forms the legal foundation of the WTO.
India believes that introducing non-trade issues into the WTO framework could gradually alter the organization’s original purpose and weaken its legitimacy.
Threat to Multilateralism and Consensus
India strongly supports the WTO’s traditional system of multilateralism and consensus-based decision-making, where each member country has an equal voice.
India fears that adopting agreements through the plurilateral route could undermine this democratic structure. If groups of countries begin introducing agreements without the consent of all members, it could create a “two-tier WTO” dominated by major economic powers.
Such a system may marginalize smaller developing countries and weaken the collective negotiating strength of the Global South.
India therefore sees the IFD Agreement as a potential threat to the inclusive and consensus-oriented nature of the WTO system.
Erosion of Sovereign Policy Space
Another major concern for India is the possible erosion of its domestic policy autonomy.
The IFD framework proposes mechanisms such as:
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Independent investment screening systems
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Pre-investment appeal procedures
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Binding transparency obligations
India fears that such legally binding commitments could restrict the ability of governments to regulate foreign investments according to national priorities and developmental needs.
For countries like India, policy flexibility is extremely important in sectors related to:
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National security
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Defence
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Atomic energy
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Strategic infrastructure
India believes that governments must retain the sovereign right to regulate investments according to domestic economic conditions and security concerns.
Public Stockholding and Food Security Concerns
India’s opposition to the IFD Agreement is also linked to its long-standing demand for a Permanent Solution for Public Stockholding (PSH) under the WTO framework.
Public Stockholding programmes are essential for India’s:
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Minimum Support Price (MSP) system
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Food procurement policies
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Welfare schemes such as the Pradhan Mantri Garib Kalyan Anna Yojana
India argues that developed countries are pushing new agreements like the IFD while important issues affecting developing nations, especially food security, remain unresolved.
Although a temporary “Peace Clause” was introduced during the 2013 Bali Ministerial Conference, India continues to demand a permanent and legally secure solution for Public Stockholding programmes.
Trade experts therefore view India’s opposition as partly strategic, with the country using the IFD negotiations to pressure WTO members into addressing unresolved Doha Development Agenda issues.
The “China Angle”
India’s concerns regarding the IFD Agreement also have a significant geopolitical dimension often described as the “China Angle.”
A large number of countries supporting the IFD Agreement are also participants in Belt and Road Initiative projects promoted by China.
India fears that harmonized investment regulations under the IFD framework may indirectly strengthen China’s global investment networks and increase its economic influence in strategically sensitive regions such as:
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South Asia
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The Indian Ocean Region
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Developing countries dependent on Chinese investments
From India’s perspective, integrating the IFD Agreement into the WTO system may create regulatory structures that disproportionately benefit China’s expanding overseas investment footprint.
Way Forward
Need to Prioritize Doha Development Agenda
India believes that the WTO should first focus on unresolved multilateral issues under the Doha Development Agenda (DDA) before introducing new plurilateral agreements.
Issues such as:
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Agricultural subsidies
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Special and Differential Treatment (S&DT)
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Restoration of the WTO Appellate Body
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Permanent Solution for Public Stockholding
must be addressed to maintain the trust of developing countries in the WTO framework.
Preference for Bilateral Investment Treaties
Instead of accepting a rigid global investment framework, India prefers negotiating Bilateral Investment Treaties (BITs).
Such agreements provide greater flexibility and allow India to:
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Protect national security interests
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Maintain regulatory autonomy
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Safeguard developmental priorities
This approach helps India balance investment promotion with sovereign policymaking.
Building Coalitions with Developing Countries
India also needs to strengthen cooperation with:
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African nations
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Least-developed countries
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Other developing economies
By building broader coalitions, India can better defend the multilateral and consensus-based nature of the WTO and prevent the marginalization of developing countries in global trade governance.
Conclusion
India’s opposition to the Investment Facilitation for Development (IFD) Agreement reflects a careful balancing of economic, developmental, and strategic interests. While the agreement may simplify global investment procedures, India remains concerned about preserving the multilateral structure of the World Trade Organization, protecting sovereign policymaking powers, and safeguarding critical domestic priorities such as food security. The debate surrounding the IFD Agreement highlights the broader challenge faced by developing countries in balancing globalization with national development objectives and strategic autonomy