India’s Development Partnership Initiatives in South Asia

India’s development partnership initiatives in South Asia form the core of its “Neighbourhood First” policy. These programs combine concessional credit, non-repayable grants, technical capacity building, and digital infrastructure assistance. Rather than using conditional lending models, India focuses on demand-driven, consultative assistance tailored to partner countries’ national priorities.

Institutional Architecture of India’s Development Cooperation

India manages its external development cooperation through dedicated administrative frameworks within the Ministry of External Affairs and specialized financial institutions.

Development Partnership Administration (DPA)

• Set up in 2012 within the Ministry of External Affairs (MEA) to streamline foreign aid and project execution.
• DPA-I: Manages concessional financing, project appraisal, and Lines of Credit (LOCs) in coordination with the Ministry of Finance and Exim Bank of India.
• DPA-II: Administers the Indian Technical and Economic Cooperation (ITEC) program and small grant projects across developing regions.
• DPA-III: Executes large-scale grant projects in neighboring countries, including Nepal, Bhutan, Bangladesh, Sri Lanka, Maldives, and Afghanistan.
• DPA-IV: Oversees cultural conservation, heritage restoration, and archaeological projects.

Concessional Lines of Credit (LOCs)

• Extended under the Indian Development and Economic Assistance Scheme (IDEAS) managed by the Department of Economic Affairs, Ministry of Finance.
• Operated through the Export-Import Bank of India (Exim Bank) at subsidized interest rates.
• Supported by the Government of India through interest equalization support and sovereign repayment guarantees.
• South Asian neighbors receive over half of India’s global credit commitments, with Bangladesh receiving the largest single share.

High Impact Community Development Projects (HICDPs)

• Formerly called Small Development Projects (SDPs).
• Focus on grassroots community infrastructure in education, primary healthcare, sanitation, and drinking water.
• Executed directly in partnership with local administrative bodies and district councils for rapid commissioning.

Country-Wise Development Cooperation in South Asia

Bhutan

• India has funded Bhutan’s Five-Year Plans since the launch of the First Plan in 1961.
• Hydropower cooperation operates as a bilateral model: India builds run-of-the-river plants and imports surplus electricity.
• Major commissioned projects include the Chukha (336 MW), Kurichhu (60 MW), Tala (1,020 MW), and Mangdechhu (720 MW) hydroelectric plants.
• The Punatsangchhu-I and Punatsangchhu-II hydro projects are under bilateral execution.
• India built the Penden Cement Plant, Paro International Airport, and the Bhutan Broadcasting Station.

Bangladesh

• Bangladesh is India’s largest recipient of concessional Lines of Credit, totaling roughly 8 billion dollars.
• Physical connectivity initiatives include the Maitree Setu (Feni River Bridge) linking Sabroom in Tripura with Ramgarh in Bangladesh.
• Rail links restored with Indian aid include Haldibari–Chilahati, Chianahati–Radhikapur, and the Agartala–Akhaura cross-border rail link.
• India built the 1,320 MW Maitree Super Thermal Power Project at Rampal in Bagerhat district via the Bangladesh-India Friendship Power Company.
• Cross-border energy transport operates through the 131.5 km India-Bangladesh Friendship Pipeline (IBFP) carrying diesel from Siliguri to Parbatipur.

Nepal

• Cross-border integrated check posts (ICPs) built at Birgunj, Biratnagar, and Nepalgunj streamline bilateral trade and cargo clearance.
• The Motihari–Amlekhgunj pipeline was South Asia’s first operational cross-border petroleum pipeline.
• The 900 MW Arun-III Hydroelectric Project is being constructed by SJVN Limited on a Build-Own-Operate-Transfer basis.
• Post-earthquake reconstruction assistance funded the rebuilding of over 50,000 housing units in Gorkha and Nuwakot districts.
• Rail infrastructure projects include the cross-border broad-gauge link from Jaynagar (Bihar) to Kurtha (Nepal).

Sri Lanka

• The Indian Housing Project (IHP) built over 50,000 houses with grant funding for war-affected and estate-worker populations in Northern, Eastern, and Central provinces.
• India constructed the 150-bed Dickoya Multi-Specialty Hospital in the central tea-plantation region and the Jaffna Cultural Centre.
• India provided nationwide emergency medical care by funding the 1990 Suwa Seriya island-wide free ambulance service.
• During the 2022 Sri Lankan economic crisis, India provided over 4 billion dollars in financial support, including credit lines for fuel, food, and currency swap agreements.
• Reconstruction of the railway network in Northern Sri Lanka includes the Colombo–Jaffna–Kankesanthurai and Medawachchiya–Talaimannar lines.

Maldives

• The Greater Malé Connectivity Project (GMCP) is a 6.74 km bridge and causeway network funded through a 100 million dollar grant and a 400 million dollar LOC.
• India constructed the Indira Gandhi Memorial Hospital (IGMH) in Malé, which remains the country’s premier multi-specialty tertiary hospital.
• Built the National College for Policing and Law Enforcement (NCPLE) at Addu City.
• Redevelopment of Hanimaadhoo and Gan international airports to expand regional tourism infrastructure.

Afghanistan

• Completed the 218 km Zaranj–Delaram Highway (Route 606) in Nimroz province, connecting southwestern Afghanistan to the Iranian border.
• Constructed the Afghan Parliament Building in Kabul, featuring the Atal Block.
• Built the 42 MW Afghan-India Friendship Dam (Salma Dam) on the Hari River in Herat province.
• Restored the historic Stor Palace in Kabul and built the Indira Gandhi Institute of Child Health.

Capacity Building and Digital Partnerships

Indian Technical and Economic Cooperation (ITEC)

• Established in September 1964 as a bilateral assistance programme under the MEA.
• Offers civilian and defence training slots to working professionals across partner nations.
• Fully funds tuition, international airfare, living allowances, and accommodation for overseas candidates.
• Trains South Asian civil servants, election officials, judicial officers, and engineers at premier Indian administrative and technical institutions.

Digital Public Infrastructure (DPI) Cooperation

• Deployment of the National Knowledge Network (NKN) extension to Bhutan, Bangladesh, Sri Lanka, and Maldives to connect regional universities.
• Integration of the Unified Payments Interface (UPI) with national payment switches to facilitate cross-border person-to-person and merchant remittances.
• Grant-funded digital projects such as the Sri Lanka Unique Digital Identity (SL-UDI) project, modeled on the Aadhaar framework.

Facts on India’s Development Partnerships in South Asia

• India launched the ITEC programme on 15 September 1964 through a formal Union Cabinet decision.
• Bhutan became the first foreign country to construct an entire Five-Year Plan with technical and financial assistance from India.
• The Salma Dam in Herat, Afghanistan, was formally inaugurated in June 2016 and renamed the Afghan-India Friendship Dam.
• The Maitree Setu bridge over the Feni River connects Sabroom in South Tripura directly with the Chittagong port in Bangladesh.
• The 1990 Suwa Seriya ambulance service in Sri Lanka was originally launched with an Indian grant in the Western and Southern provinces before expanding nationwide.
• The 42 MW Salma Dam provides both irrigation water to 75,000 hectares of farmland and electricity to industrial areas of Herat.
• The South Asia Satellite (GSAT-9), launched by ISRO in May 2017, provides free communication, tele-education, and disaster support links to participating South Asian countries.
• The High Impact Community Development Projects framework permits project execution up to specific financial limits without multi-tiered central bureaucratic clearances.
• Under the IDEAS framework, at least 75% of goods and services funded via Indian LOCs must be sourced directly from Indian exporters and contractors.
• The 900 MW Arun-III project represents the largest single foreign direct investment project under construction in Nepal’s energy sector.