Context
India’s relationship with the Global South has undergone a significant transformation over the last decade. The nation has not only increased its financial commitments but also diversified the methods through which it supports development cooperation. However, evolving global financial dynamics—marked by a deepening debt crisis in the Global South and a contraction in traditional aid—call for a strategic reassessment of India’s approach. Within this changing landscape, Triangular Cooperation (TrC) has emerged as an effective mechanism to enhance and reshape India’s development partnerships.
Growing Trends in India’s Development Cooperation and Evolving Financial Context
- Growth in Development Cooperation
India’s partnership with Global South countries has expanded both in breadth and volume. From 2010-11 to 2023-24, India nearly doubled its development assistance, increasing outflows from $3 billion to $7 billion. These funds have been deployed through various channels including capacity building, technology transfer, and duty-free access to Indian markets. Central to this engagement has been the Lines of Credit (LoCs) extended under the Indian Development and Economic Assistance Scheme (IDEAS). Through LoCs, India has supported infrastructure and development projects abroad at concessional rates—borrowing from international markets and lending at softer terms, subsidized by the state. While this model has served well historically, it is now facing significant challenges amid global fiscal uncertainty and rising debt burdens.
- Changing Financial Realities and Debt Challenges
The budget for 2025-26 indicates a reconsideration of this approach. The Finance Ministry has raised doubts about the long-term sustainability of LoCs. At international forums such as the G-20, India has expressed concern over the soaring sovereign debt levels across the Global South, signaling a more cautious stance on financial commitments. This caution is warranted given the increasingly volatile global financial environment, which makes borrowing from capital markets less predictable and heightens the risk of repayment defaults by recipient countries. Moreover, Official Development Assistance (ODA), a traditional source of development finance, is shrinking sharply—from $214 billion in 2023 to a projected $97 billion, a nearly 45% decline.
India’s Proposal for a Balanced Engagement Framework and Rise of Triangular Cooperation
- Towards a Balanced Modalities Framework: In response to these challenges, India advocates for a more balanced and nuanced approach. At the third Voice of Global South Summit (VoGS) in 2024, Prime Minister Narendra Modi introduced the concept of a Global Development Compact (GDC). This integrated framework harmonizes five key modalities: capacity building, technology transfer, market access, grants, and concessional finance. This marks a strategic move away from overdependence on LoCs towards a diversified development model emphasizing long-term sustainability, shared growth, and risk mitigation. Additionally, India is concentrating on forming broader, deeper partnerships, especially those that can effectively operate in third countries.
- Emergence of Triangular Cooperation (TrC): Among the new frameworks gaining traction is Triangular Cooperation, which involves collaboration between a traditional donor from the Global North, a leading partner from the Global South (such as India), and a recipient developing country. This model facilitates the co-creation of development solutions that are context-specific, cost-efficient, and mutually advantageous. TrC leverages pooled resources, shared expertise, and best practices. Although comprehensive data is still forthcoming, early estimates value TrC projects between $670 million and $1.1 billion. Countries including Brazil, Indonesia, Japan, and Germany have already established successful TrC portfolios across regions like Southeast Asia, Africa, and Latin America.
India’s Strategic Deployment of Triangular Cooperation
India has proactively adopted TrC as a key tool to broaden its development diplomacy. A landmark event in 2022 was the signing of a Joint Declaration of Intent with Germany to implement TrC projects in Africa, Asia, and Latin America. Current projects are underway in nations such as Cameroon, Ghana, Malawi, and Peru, focusing on sectors like energy, education, and healthcare. These initiatives demonstrate how investments in infrastructure can drive positive social outcomes—improved energy grids, for example, enhance digital connectivity, enabling better access to online education and healthcare services.
Conclusion
While Lines of Credit have traditionally formed the foundation of India’s development cooperation, shifting financial realities, rising sovereign debt concerns, and a changing aid environment require a strategic overhaul. The Global Development Compact and the adoption of Triangular Cooperation represent progressive pathways forward. By leveraging its diplomatic influence, technical expertise, and collaborative spirit, India is poised to co-create a resilient, equitable development architecture—one that balances ambition with pragmatism and partnership with sustainability.
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