Nov 9 2012
Britain is to make no new financial aid commitments to India with immediate effect, International Development Secretary Justine Greening has announced.
The move will stop all financial assistance from the UK to India from 2015, and will save about £200 million between now and then.
Ms Greening, who took responsibility for Britain's aid budget in September, said programmes already under way would be completed as planned but no new ones would be signed off.
British support for India will in future be limited to skills-sharing in area areas like trade and investment and health.
"After reviewing the programme and holding discussions with the government of India this week, we agreed that now is the time to move to a relationship focusing on skills-sharing rather than aid," the International Development Secretary said. "India is successfully developing and our own bilateral relationship has to keep up with 21st century India. It's time to recognise India's changing place in the world.
"It is of course critical that we fulfil all the commitments we have already made and that we continue with those short-term projects already under way which are an important part of the UK and government of India's development programme."
The move follows criticism of the Government for maintaining aid to India, which has a booming economy and its own space programme. It will delight Conservative MPs critical of Prime Minister David Cameron's commitment to spending 0.7% of national income on overseas aid.
The changes will mean Britain spending about £200 million less from 2013 to 2015 than had been planned by former international development secretary Andrew Mitchell.
After 2015 the UK's relationship with India is to focus on "technical co-operation", with a hub of British development experts working with the Delhi government, and a programme of private sector investment to assist some of the poorest parts of India. Officials said the UK's technical assistance is expected to be about a tenth of the current programme of support. British funding to India was cut last year but still committed the UK to spending £280 million a year until 2015.
Indian finance minister Pranab Mukherjee last year said the country no longer wanted or needed the British aid, describing the money as "a peanut in our total development expenditure".