With the World Trade Organisation’s 14th ministerial conference (MC14) presently underway in Yaoundé, Cameroon, a curious contest is unfolding. India has opposed the proposed Investment Facilitation for Development (IFD) agreement. This may appear on its face to be a principled effort to uphold the WTO’s multilateral character and consensus-based model. However, India’s stance is primarily motivated by a desire to counter the growing influence of China in global investment and to protect its own policies that may conflict with accepted principles of international trade.
Within the WTO, China has been a strong backer of the Chile and South Korea-led IFD agreement since 2017. The IFD’s broad objective is to create a framework of legally binding rules to simplify investment procedures and boost cross-border investment. This attraction has resonated among countries across continents – from potential investors and those that attract little FDI.
Over the years, IFD, which began as a structured discussion group with a Joint Ministerial Statement by 70 countries in December 2017, has steadily attracted supporters – currently 128, or more than three-quarters of the 166 WTO members. Supporters include Australia, Japan, the European Union, and its member states.
Beneath this technical opposition are the concerns that the IFD would lead to countries losing policy flexibility in regulating foreign investment.
At a previous ministerial conference in Abu Dhabi, supporters pushed to incorporate the IFD agreement under Annex 4’s plurilateral agreements provision, allowing participating countries to amend it without requiring consensus from the broader WTO membership. However, it is here that the consensus rule of the WTO has created hurdles. In Abu Dhabi, India and South Africa lodged a formal objection, blocking IFD’s adoption, a move that invited criticism both from the West and the smaller countries.
The opponents of IFD are only 38 in number – a small minority, yet enough to block adoption. Both India and South Africa see the IFD proposal as one centrally concerned with investment, and therefore outside the WTO mandate as it is not a trade issue. India and South Africa argue that IFD’s proposed incorporation undermines the consensus-based decision-making process, which is the hallmark of the WTO’s policy formulation mechanism.
However, beneath this technical opposition are the concerns that IFD would lead to countries losing policy flexibility in regulating foreign investment. India argues that the poorer countries, lacking the institutional capacity to protect themselves from undue foreign influence, would lose their policy autonomy. New Delhi fears that the IFD would enable China and other supporting members to bring investment-related issues formally under the WTO’s purview. Unsurprisingly, even the appeal by WTO chief Ngozi Okonjo-Iweala in June 2025 to support the IFD has been ignored by New Delhi.
Beyond the legal arguments, New Delhi’s geopolitical concerns include the windfall that the IFD could deliver for the Chinese Belt and Road Initiative (BRI). Indian commentators often argue that IFD’s launch in 2017, which came four years after the BRI’s inauguration in 2013, makes it a tool to further Beijing’s investment interests. They also cite the fact that more than three-quarters of the countries participating in the IFD initiative, including several in India’s neighbourhood, are BRI members, explaining their enthusiasm about the agreement. This alarmist position continues to prevail, despite India’s improving relations with Beijing, and also in the face of support for IFD from countries like Japan, with which India has been collaborating to launch the Asia-Africa Growth Corridor (AAGC) as a counter to BRI in Africa.
But wider considerations might be at play. India’s hard bargaining could be tactically linked to its efforts to seek compromise on the public stockholding of food grains issue, a matter of contention at the WTO for many years. India provides five kilograms of food grains per person per month for free to around 813 million Indians under the Prime Minister’s Food Welfare Scheme for the Poor. Such a food security scheme, some WTO members argue, distorts global trade. Under the WTO’s Agreement on Agriculture, agricultural subsidies should not exceed 10% of the value of agricultural production, although developing nations receive certain protections.
India has repeatedly invoked the “peace clause” agreed to in 2013, allowing developing countries to breach the ceiling without facing legal action. The clause, however, was supposed to be only an interim arrangement. India might be seeking to negotiate a permanent solution on the public stockholding issue in exchange for a softening of its position on the IFD agreement.
The blocking of the IFD agreement could hurt smaller nations at a time when the US has weaponised trade and tariffs. A study in 2023 estimated that IFD could lead to between US$200 and $800 billion of improvements in global welfare. While South Africa could possibly revisit its position on IFD under pressure from fellow African countries, India is not expected to change its stance, even in the face of criticism from the developing as well as the developed world. This is worth a close watch.
