India resists WTO investment agreement over policy, trade concerns

WTO Director-General Ngozi Okonjo-Iweala urged India to join the Investment Facilitation for Development (IFD) Agreement, backed by many members but opposed by India over concerns about policy autonomy and its non-trade focus. The IFD, finalized at the WTO’s 13th Ministerial Conference, aims to improve investment environments.

World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala has urged India to join the Investment Facilitation for Development (IFD) Agreement, a proposal initially put forward by China and now supported by a growing number of WTO member countries.

She said, “We need India as a leader. India is a leading country, and India is doing well. So India needs to open the way for other developing countries. For example, we want (India to) support investment facilitation for development… because so many developing countries…90 out of the 126 who are members, would like to move with this.”

The IFD seeks to create a pre-investment review or appeal process conducted by an independent body to evaluate all investments. The WTO website states that the IFD Agreement establishes global benchmarks designed to support member countries in enhancing their investment and business environments, making it easier for investors from all sectors to set up and expand their operations.

India is among the few countries opposing the IFD, arguing that it does not fall within the scope of trade issues and therefore cannot be adopted without full consensus. Moreover, there is debate over whether the proposed pact qualifies as a trade agreement, and it cannot be officially recognized as an agreement until it is ratified by the signatories.

India has raised concerns that it could constrain its policy autonomy on investment issues. India also maintains that the WTO’s primary focus should remain on trade-related matters, rather than expanding into investment facilitation.

According to Government sources, China has been exerting considerable pressure to advance the IFD, garnering support from several countries—including Pakistan—during deliberations at the WTO General Council.

The IFD Agreement was first introduced in April 2017. It was finalized during the WTO’s 13th Ministerial Conference held in February–March 2024 and included as part of Annex 4 of the Marrakesh Agreement, which established the WTO. 

While WTO agreements are traditionally reached through consensus, existing rules allow for plurilateral agreements—deals made by a subset of members—where obligations apply only to the signatories. China is pushing for the agreement to be adopted as a full WTO accord, enabling access to the organization’s dispute settlement mechanism for investment-related issues.

Ms Okonjo-Iweala stated that she held discussions with Indian Commerce and Industry Minister Piyush Goyal on various topics, including WTO reforms and agricultural policy. Regarding agriculture, she emphasized the need to understand India’s concerns and expressed the importance of being as supportive as possible.

She also noted that the global trading system is facing disruptions unlike anything seen before. She highlighted that approximately three-quarters of global goods trade continues to operate under WTO rules, particularly under the Most Favoured Nation (MFN) principle, which members are eager to protect.

The WTO Director-General, a Nigerian-American economist, is currently attending a mini-ministerial meeting held on the sidelines of the OECD Ministerial Council Meeting in Paris. Organized by Australia, the meeting comes at a time when preparations are underway for the 14th WTO Ministerial Conference, scheduled to take place in Cameroon in March 2025. Trade ministers from approximately 25 countries—including India, Australia, and Singapore—are participating in the discussions.