Britain will stop giving financial aid to India by 2015, the government says, marking a shift in ties between the one-time imperial power and its fast-growing former colony.
The move follows anger at handouts to an economy which is Asia's third largest and has a space programme, at a time of spending cuts and economic gloom in the United Kingdom.
"It's time to recognise India's changing place in the world," International Development Secretary Justine Greening said in a statement that estimated savings of GBP 200 million by 2015.
Existing programmes will be completed by that date and Britain will make no new cash commitments.
India became independent from British rule in 1947. It is now the third largest investor in Britain and its companies own flagship brands including Jaguar Land Rover.
Despite India's rapid economic development over the past decade, it suffers deep pockets of severe malnutrition and extreme poverty.
The move is unlikely to anger the Indian government, whose former finance minister described Britain's aid contribution to India as a 'peanut.' In 2011, Prime Minister Manmohan Singh announced a $5 billion aid credit line for Africa.
Controversy over the aid programme flared after former International Development Secretary Andrew Mitchell said last year the GBP 280 million annual assistance was partly about "seeking to sell the Typhoon."
India later entered into exclusive negotiations with France's Rafale fighter, rejecting the British-backed plane for an estimated $15 billion contract.