Cash-strapped Britain today announced it will halt all its aid to India in 2015 and make further cuts in the annual 280 million-pound assistance to the country for the remaining three years, citing the booming Asian giant's rising stature on the world stage.
"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," International Development Secretary Justine Greening said, announcing the UK's decision to end all aid to India in 2015.
British aid to India was cut last year but still it committed the UK to spending 280 million pounds annually until 2015.
Greening, who was in India recently for talks on future aid arrangements, said the government here will reduce its annual support to India over the next three years, saving around 200 million pounds ahead of the cut-off.
Her statement came a day after British Foreign Secretary William Hague held talks with External Affairs Minister Salman Khurshid in Delhi.
Greening said programmes already under way would go ahead but nothing new would be approved.
Future British support for India will be limited to skills-sharing in areas like trade, investment and health and will be worth around 30 million pounds-a-year.
The move follows criticism that the government here was imposing drastic austerity measures at home while handing out a fortune in aid to "rich" developing nations.
India has become a focus of the anger because it has its own space programme and a booming economy that is growing at 8 per cent a year.
The decision will also delight Tory MPs who have attacked Prime Minister David Cameron's commitment to spend 0.7 per cent of national income on overseas aid. Greening said:
"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....
"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."
Officials said that during her India visit, Greening was told that the Indian government valued Britain's "technical assistance" far more than money.
Greening said: "Having visited India I have seen first hand the tremendous progress being made."
The UK's overall financial contribution to India since the Coalition took office in the UK is expected to total more than one billion pounds.
After 2015, the contribution of Britain's technical expertise to development programmes in India will cost an estimated one tenth of the current total aid budget to the country.
As existing grants are phased out, the government expects to save around 200 million pounds over the next three years.
Greening's announcement is likely to be seen as a sign that Britain intends to cut aid to wealthier nations, including those that are preparing to enter the EU, and focus instead on the poorest countries.
She told the Conservative conference last month: "We should recognise that as countries get richer, we need to be responsible about how we transition in our relationship with them from aid to trade."
The Prime Minister has pledged to spend 0.7 per cent of national income on development programmes abroad and the budget will be worth 12.6 billion pounds by 2014.
This commitment will not be affected by today's announcement and officials said money saved from aid to India was likely to be spent on development schemes in poorer parts of the world.