Foreign Aid and India's Aid-Giving Role

5.1 India as Aid Recipient — Historical Context

India received significant foreign aid in its early decades.

Key aid programmes:

• USA's PL-480 (1954): Concessional food loans during food deficit years (1950s–60s)
• World Bank IDA loans: Long-term concessional credits for development projects
• UK DFID, Japan JICA: Infrastructure and social sector aid

India's current ODA (Official Development Assistance) receipt:

• India graduated from World Bank's IDA eligibility in 2014 — per capita income crossed the threshold
• Japan JICA continues large-scale infrastructure loans (Metro, highways) at soft rates of 0.1–1.4% interest
• World Bank IBRD loans (market rates) still active: ~$20 billion portfolio

5.2 India as Aid Donor — The "Development Partner" Role

India has transformed from an aid recipient to an increasingly active development partner in the Global South.

EXIM Bank Lines of Credit (LOC):

• India's primary mechanism for development finance globally
• Total: $30+ billion to 63+ countries
• Focus regions: Africa (42 countries), South Asia, South-East Asia, Central Asia, Latin America
• Mechanism: Government-to-government credit at concessional rates (1–2.5% interest, 20 years tenor, 5-year grace); 65–70% of goods/services procured from India
• Projects financed: railways, roads, power plants, solar parks, hospitals, IT parks

Key bilateral LOC examples:

• Bangladesh: $7.36 billion (roads, railways, power — largest India–Bangladesh LOC)
• Sri Lanka: $1.4 billion (crisis support + infrastructure)
• Nepal: $1.6 billion (hydropower, connectivity)
• Myanmar: Rs 4,500 crore (Kaladan multi-modal project)
• Africa (multiple): Rail, IT, telecom, solar projects

Indian Technical and Economic Cooperation (ITEC) Programme (since 1964):

• Covers 160+ countries; 12,000+ slots/year for training programmes in India
• Subjects: governance, IT, defence, healthcare, agriculture

Indian Development and Economic Assistance Scheme (IDEAS):

• Part of EXIM Bank portfolio
• Provides government grants and technical assistance

5.3 India's Trade Agreements

Free Trade Agreements (FTAs) and CEPAs:

Agreement	Partner	Year	Status
ASEAN FTA (Goods)	10 ASEAN nations	2010	Active
India-Korea CEPA	South Korea	2010	Active
India-Japan CEPA	Japan	2011	Active
India-UAE CEPA	UAE	Feb 2022	Active (India's fastest FTA)
India-Australia ECTA	Australia	Nov 2022	Active
India-UK FTA	UK	Ongoing	Under negotiation
India-EU FTA	European Union	Ongoing	Under negotiation
India-GCC FTA	Gulf Cooperation Council	Ongoing	Under negotiation
RCEP	14 Asia-Pacific nations	2019: India exited	India is not a member

India's RCEP exit (November 2019): India withdrew from RCEP (Regional Comprehensive Economic Partnership) citing:

1. Inadequate safeguards against Chinese goods flooding
2. Lack of reciprocal market access in services (India's IT exports)
3. Unresolved issues with base year for tariff reductions
4. Threat to Indian agriculture and MSMEs

Foreign Trade Policy (FTP) 2023–28 (launched March 31, 2023):

• Target: $2 trillion total exports (goods + services) by 2030
• Key provisions:
  1. RODTEP (Remission of Duties and Taxes on Exported Products): Refund of embedded domestic taxes on exports — succeeds MEIS
  2. Districts as Export Hubs: Each district to develop at least one export product
  3. Advance Authorisation and EPCG: Duty-free import of inputs for export production
  4. E-commerce Exports: Enabling small manufacturers to export via Amazon, Alibaba
  5. Amnesty Scheme: One-time settlement for exporters with pending EPCG/advance licence obligations

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