India has rejected a China-backed proposal for an investment facilitation agreement at the World Trade Organization (WTO), citing systemic and legal concerns. New Delhi has argued that the proposal, known as the Investment Facilitation for Development (IFD) proposal, falls outside the mandate of the global trade body and could dilute the WTO's multilateral nature.

The IFD proposal, which is supported by a group of over 120 countries led by China, aims to create a multilateral framework to improve transparency and streamline investment procedures, thereby making countries more attractive to foreign and domestic investors. Proponents argue that the agreement would help developing countries attract higher-quality investment, particularly at a time when many are struggling with weak growth and high inflation. The structured discussions on the proposed multilateral framework began in early 2018, following the launch of a Joint Ministerial Statement by various WTO members in December 2017.

However, India has consistently opposed the IFD, maintaining that the WTO should primarily focus on trade-related issues. An official stated that India believes that the WTO should deal with issues related to trade and that investment facilitation is a non-trade issue. India's concern stems from the fact that proponents of IFD should not be attempting to bring a “non-mandated, non-multilateral issue” to the formal process in the WTO. Such an attempt would violate the WTO framework and the fundamental rule of consensus-based decision-making.

Furthermore, India is against the proposal to bring the IFD through Annexure-4 of the WTO, which would make the agreement binding only on signatory members and not on those who oppose it. India believes that this approach would further undermine the multilateral nature of the WTO. Abhijit Das, an expert on international trade, said that it will gradually normalise plurilateral pacts and that will "really erode the influence of developing countries to advance their interest in the future".

India has previously blocked the IFD proposal in December of last year and at the General Council Meeting of the WTO. A senior government official stated that it is debatable whether the IFD is a trade agreement as per the definition. The IFD was first introduced in 2017 by China and countries that are dependent on Chinese investments.

The rejection of the IFD proposal comes as the WTO grapples with various issues, including reforms andDuring the WTO’s 13th Ministerial Conference (MC13) in Abu Dhabi, India, along with South Africa, ensured that the IFD proposal would not be included in the outcome document of the conference because there was no consensus on the agreement. India has also signaled its opposition to further extensions of the e-commerce moratorium beyond March 31, 2024. The moratorium, which has been in place since 1998, exempts electronic transmissions from customs duties, a policy that has sparked debate within the WTO.