by Rachel Ogbu

United Kingdom has announced it will end financial aid to India by 2015.

Justine Greening, international development secretary said aid worth about £200m will end between now and 2015 and the UK will replace that aid with offering technical assistance.

Greening said the move, which will be popular with Tory MPs, reflected India’s economic progress and status.

Giving his reaction, India’s foreign minister Salman Khurshid said: “Aid is the past and trade is the future.”

But charities described the move as “premature” and warned it would be the poorest who suffered.

Until last year, when it was overtaken by Ethiopia, India was the biggest recipient of bilateral aid from the UK, receiving an average of £227m a year in direct financial support over the past three years.

But the UK’s support for India, one of the world’s fastest-growing economies, has been a cause of concern among Conservative MPs, many of whom believed that the UK should not be giving money to a country which has a multi-million pound space programme.

Greening confirmed the “tremendous progress” that India was making and reinforced her view that the basis of the UK’s support needed to shift from direct aid to technical assistance in future.

“After reviewing the programme and holding discussions with the government of India, we agreed that now is the time to move to a relationship focusing on skill sharing rather than aid,” she said.

“India is successfully developing and our own bilateral relationship has to keep up with 21st Century India.

“It is time to recognise India’s changing place in the world.”

Although all existing financial grants will be honoured, the UK will not sign off any new programmes from now on.

Last year the UK gave India about £250m in bilateral aid as well as £29m in technical co-operation.

By focusing post-2015 support on trade, skills and assisting private sector anti-poverty projects which can generate a return on investment, the UK estimates its overall contribution will be one-tenth of the current figure.

In making the decision, the UK is citing the progress India has made in tackling poverty in recent years. It says 60 million people have been lifted out of poverty as a result of the doubling of spending on health and education since 2006.

India spends £70bn on its social welfare budget, compared with £2.2bn on defence and £780m on space exploration.

But Labour MP Keith Vaz, a former chair of the Indian-British parliamentary group, was not in full support of the withdrawal of aid. “Although undoubtedly India has progressed in the past 20 years, there are still an estimated 360 million people surviving on less than 35 pence per day,” he said.

“In withdrawing our aid to India, which will clearly only affect the most vulnerable, we need to see the minister’s plan for how she will work with other organisations to make sure the gaps we are creating will be filled.”

War on Want, which campaigns to end global poverty, said aid should not just stop because India had become a middle-income country.

Financial support needed to be “smarter” and geared towards supporting “progressive movements” capable of bringing about political change and tackling growing inequality, the pressure group said.