OPINION | India and the WTO Investment Facilitation Agreement: Beyond misleading headlines

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A recent article suggested that the World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala “flayed” India for blocking the proposed Investment Facilitation for Development (IFD) pact. Such language may grab attention, but it mischaracterises the substance of her remarks.

The Director-General has consistently advocated for the IFD as a mechanism to protect investment, enhance transparency, reduce bureaucratic obstacles, and streamline investment procedures, advantages she believes would particularly benefit developing and least-developed countries (LDCs).When I spoke to her she clearly said that her remarks were intended as an invitation for broader participation rather than a censure of any group of countries.

The Investment Facilitation for Development (IFD) is a plurilateral initiative within the World Trade Organization (WTO), currently endorsed by over 120 members, including nearly 90 developing countries and 27 least developed countries (LDCs). Notably, the IFD does not encompass investment protection, investor-state dispute settlement, or market access. Instead, its provisions are crafted to streamline administrative procedures, enhance transparency, and improve coordination among government agencies.

These issues are significant to developing countries, including India. Complex regulatory frameworks frequently discourage foreign investments. Research indicates that IFD could yield global welfare gains ranging from 0.56 to 1.74 percent, contingent upon the extent of its implementation. Given that the Sustainable Development Goals (SDG) investment gap has expanded from $2.5 trillion in 2015 to nearly $4 trillion annually, the potential impact of measures designed to enhance investment flows is evident.

India need not choose between outright resistance and unconditional acceptance. A pragmatic middle ground allows India to preserve autonomy while capitalising on the IFD’s developmental promise.

1) Phased Commitments: India could adopt a sequenced approach, as it did under the Trade Facilitation Agreement. Low-cost obligations like publishing investment-related regulations can be implemented immediately, while resource-intensive reforms such as digital single-windows or inter-agency one-stop shops can be deferred until adequate capacities and infrastructure are in place. This phased adoption would provide time to assess impacts and calibrate future steps.

2) Safeguards for Sensitive Sectors: By carving out areas such as agriculture, defence production, and essential public services, India can protect its strategic and developmental priorities. These exemptions would ensure that IFD-driven reforms complement, rather than constrain, national sovereignty in critical domains, while helping preserve domestic consensus for reform.

3) Leveraging Special and Differential Treatment (SDT) flexibilities: The IFD’s flexible “A-B-C” categorisation system allows developing members to implement some provisions immediately, delay others, and link still others to technical assistance. India could structure its “C” commitments explicitly around domestic reform priorities—for example, asking for financing and technical expertise for digitised customs portals, state regulator training, or harmonised clearances across ministries. This turns defensive flexibility into a proactive demand for international support.

4) Shaping the Agenda: Active engagement would enable India to guide the evolution of the IFD. For example, it could argue for sustainability-linked facilitation provisions, carve-outs to support MSMEs, or binding obligations on developed members to deliver capacity-building. In doing so, India would align new rules more closely with its domestic realities and strengthen its identity as a constructive problem-solver shaping the future of global investment governance.

This middle path reflects India’s historical approach: firm resistance when national interests are threatened, but constructive leadership to ensure that multilateral rules remain development friendly.

The Director-General of the World Trade Organization did not "criticize" India; rather, she articulated a development-oriented concern, emphasising that more countries should capitalise on opportunities to attract investment and reduce bureaucratic impediments to trade. India, in turn, has legitimate concerns regarding policy autonomy, implementation costs and procedural aspects, but disengagement would neither advance its sovereignty nor strengthen its leadership.

The optimal outcome lies not in mischaracterization or disengagement but in engagement on India's terms. By opting for phased commitments, protecting sensitive sectors, leveraging SDT flexibilities with well-defined demands, and actively shaping the IFD’s design, India can transform a defensive stance into a forward-looking leadership strategy. This would allow India to protect domestic autonomy while also positioning itself as the voice of large, complex developing economies navigating the challenges of 21st-century globalisation.

In short, India does not have to choose between sovereignty and openness. By adopting a calibrated middle path, it can reinforce its global reputation as a leader of the Global South, safeguard domestic priorities, and influence the future shape of multilateral investment facilitation to better serve development.