The British government is to stop giving financial aid to India from 2015.
International Development Secretary, Justine Greening, made the announcement on Friday, also stating that no new aid programmes in the country will be agreed with immediate effect.
British aid to India had already been frozen in March 2011 at 350 million euros a year until the end of this parliament.
While existing grants that have already been signed off will continue, the fact that no new projects will be started means the UK will spend 250 euros less between 2013 and 2015 than it had projected.
The move marks a change in relations between the two countries 70 years after India gained independence from Great Britain. Ms Greening, who recently visited the country, referred to the “tremendous progress” being made there and said “our own bilateral relationship has to keep up with 21st century India.”
Many Conservative Party MPs had criticised giving the funds to the booming BRICS country, pointing out the fact that it has its own multi-million euro space programme and that India gives out millions in financial aid to other countries itself.
British officials said that they will continue to provide up to 38 million euros (£30m) of “technical expertise” after the financial aid stops.
India has historically been one of the highest recipients of British aid and some charities criticised the cuts. Phil Bloomer, director of campaigns and policy at Oxfam, said the withdrawal is “too hasty” adding the money provides “a lifeline to poor families, and a third of the world’s poorest people live in India.”