• In 2017, World Trade Organisation (WTO) members first formally expressed interest in new rules on investment facilitation.
• In 2023, over 100 members of the WTO have finalized the Investment Facilitation for Development Agreement (IFDA).
• India did not participate in the negotiations.

Investment Facilitation for Development

• Investment Facilitation for Development (IFD) is the joint Initiative to develop a multilateral agreement on Investment Facilitation for development.
• It aims to improve the investment and business climate.
• It is a set of practices aimed at promoting and streamlining foreign direct investment (FDI) in developing countries.
• It seeks to create a conducive environment for investment by reducing barriers, providing incentives, and offering support to both foreign and domestic investors.
• Its scope does not include market access, investment protection, government procurement, certain subsidies, and investor-state dispute settlement (ISDS).

Objectives of IFD

• Develop an investor-friendly business environment and simplify investment procedures.
• Make it easier for investors in all sectors of the economy to invest, conduct their day-to-day business, and expand their operations.
• Develop predictable, transparent, and open investment rules for more efficient investment flows and increased business confidence.
• Increase FDI, though its provisions can also help domestic investors.

India’s stance on IFD

Rules of trade cannot be applied to investment:

• Investment facilitation does not come in the scope of the WTO.
• WTO is a forum for trade facilitation and trade-related aspects of investments only.
• Investment is completely a bilateral issue and is linked to domestic policies on attracting foreign investments.
• Investment facilitation would restrict the space for the formulation of domestic norms.
• The phrase ‘investment facilitation for development’ is a misnomer.
• There are hardly any development provisions, except extended time periods for implementation and the promised technical assistance.

Plurilateral route of negotiations:

• The plurilateral route of negotiations under which investment facilitation is being discussed has no legitimacy in the WTO.

Investor-state dispute settlement (ISDS):

• India does not want to join IFD because of fear of Investor-state dispute settlement (ISDS).
• ISDS is a neutral, international arbitration procedure.
• A system through which individual companies can sue countries for alleged discriminatory practices.

Developing and Least Developed Countries:

• It would be burdensome for developing and Least Developed Countries (LDCs), as nearly all the obligations that may be created are on host countries.
• However, it may not be difficult for India to comply given the outstanding track record in FDI liberalisation and facilitation.
• The primary focus of WTO members should be on finding solutions for food security purposes and protection for poor farmers of developing countries in case of a surge in imports.

Foreign Direct Investment in India

• Foreign direct investment (FDI) refers to a purchase of an asset in another country, such that it gives direct control to the purchaser over the asset (e.g., purchase of land and building).

FDI Inflow in India:

• India has attracted a total FDI inflow of USD 70.97 bn during the financial year 2022-23.
• Total FDI inflows in the country from 2000 to 2023 are USD 919 billion.
• Total FDI inflows received in the last 9 years (2014- 2023) was USD 595.25 bn (nearly 65% of total FDI inflow in the last 23 years).

FDI entry Routes:

• FDI is permitted either through the Automatic or Government route.
• Automatic Route: The non-resident or Indian company does not require any approval from the Government of India.
• Government route: Approval from the Government of India is required prior to investment.

IFD is a dynamic field, and its strategies may vary from one country to another based on their specific needs and circumstances. It is a critical component of a country''s economic development strategy, particularly in the context of globalization and the increasing competition for foreign investment.