India rejects WTO investment pact despite urgent need for foreign capital
India has refused to back the Investment Facilitation for Development (IFD) agreement at the World Trade Organisation (WTO). The decision comes despite growing pressure to attract foreign direct investment (FDI) for its manufacturing sector. Officials argue the move could weaken the WTO's existing structure and limit its role in global trade governance.
Meanwhile, global FDI rose by 14% in 2025, yet flows to developing economies fell by 2%. The disparity highlights the challenges many nations face in securing much-needed capital for growth.
The IFD agreement aims to create clearer international rules for investment. It seeks to improve transparency, speed up approval processes, and strengthen cooperation between countries. Supporters claim it would help developing economies, including India, attract more FDI and accelerate economic expansion.
Bangladesh recently joined the pact, bringing the total number of co-sponsors to 129. However, India's commerce and industry minister has rejected the proposal, warning that it could erode the WTO's functional boundaries. Critics argue these concerns are misplaced, as the agreement was negotiated within the WTO's own framework. India's manufacturing industry relies on FDI to expand production, adopt advanced technologies, and raise productivity. Yet, despite calls for a more pragmatic approach, the government has not introduced specific measures to improve the business climate or attract investment in key sectors. Experts suggest that stronger cooperation among Global South economies—both regionally and multilaterally—could safeguard developing nations' interests. Such partnerships might also help balance growth across emerging markets, where investment recovery remains uneven.
India's refusal to support the IFD agreement leaves its manufacturing sector without a potential boost in foreign capital. The decision contrasts with broader trends, as other developing nations, like Bangladesh, move to adopt the pact. Without policy changes or new incentives, India's ability to attract FDI may face further challenges in a competitive global market.
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