In November 2012, the government announced that UK financial aid to India would end completely in 2015. This arbitrary termination means the opportunity is missed to develop a more holistic approach to aid and investment, in the interests of India's economic development and Britain's relationship with it.

Business investment and personal remittances between the UK and India vastly outweigh the value of British government aid. These non-aid flows are crucial to people in both countries, and could provide greater benefits. This report recommends new approaches that the British government, British businesses, British investors and non-resident Indians based in Britain should adopt in order to enhance the impact of all these flows.

Given the outstanding development challenges facing India, the UK government's decision to end aid in 2015 looks both premature and politically motivated. Instead of ending aid at an arbitrary point in time, government should set out an 'exit strategy' for aid which specifies the development goals, relating to poverty and other objectives in recipient countries, to be met before aid is withdrawn. Ensuring that all stakeholders (including the British public) are clear about the rationale for exit is critical to this.

The government's sudden and unexpected changes represent a missed opportunity to reshape the UK's political debate on aid. With the right framework in place, India could provide an exemplar for how Britain eventually ends its direct overseas aid operations as countries grow and develop.