Context

With Geopoltical Compexities affecting global development finance, a solution lies in evolving mechanism of pooling resources with like minded countries.

• India’s engagement with the Global South has witnessed a dynamic transformation over the past decade. The country has not only increased its financial commitment but has also diversified its modalities of development cooperation.
• Within this evolving framework, Triangular Cooperation (TrC) has emerged as a potent mechanism to augment and redefine India’s development outreach.

Trends of India’s Development Corporation

• India’s development partnership with the Global South has grown both in scope and volume.
• Between 2010-11 and 2023-24, India nearly doubled its development outflows from $3 billion to $7 billion.
• The flows have been channelled through a variety of modalities, like capacity building programmes, technology transfer, and duty-free access to Indian markets.
• The cornerstone of this engagement has been the Lines of Credit (LoCs) extended under the Indian Development and Economic Assistance Scheme (IDEAS).
• LoCs have allowed India to support infrastructure and development projects in partner countries at concessional rates.
• However this trend is facing headwinds in current global context.

Aspects

• The recent Budget shows a clearing warning from the Ministry of Finance against relying on credit lines as a main form of international engagement.
• At the G20, India raised concerns about rising sovereign debts in Global South urging for reform.
• In 2024, during Voice of Global South Summit, India called for a global Development compact calling for a balanced approach.
• India promotes 5 key modalities of cooperation, capacity building, technology transfer, market access, grants and concessional finance.
• India should aim for harmonious mix of these methods and build stronger partnerships with countries that can help implement projects in third world countries with global south 
• Due to the global liquidity crisis and weaker repayment ability of partner countries such LoC based schemed have become less viable.
• India is also focusing on forming wider and deeper partnerships, particularly those that can operate effectively in third countries.

Emergence of Triangular Cooperation (TrC)

• A new model of pooling resources with like minded countries offer a hope for more effective development partnership.
• One of the most promising frameworks in this new paradigm is Triangular Cooperation (TrC).
• The purpose is to co-create development solutions that are context-specific, cost-effective, and mutually beneficial.
• This model brings together a traditional donor from the Global North, a pivotal partner from the Global South (like India), and a recipient developing country.

Rational for Triangular Corporation

• Funding from 19 Non DAC countries reporting to OCED rose from $1.1 billion in 2000 to $17.7 billion in 2022 showing growing partnership among rising economies.
• A landmark moment came in 2022 with the signing of a Joint Declaration of Intent with Germany, aiming to implement TrC projects across Africa, Asia, and Latin America.
• South South experience countries like Indonesia and Brazil have gained global experience by partnering with developed countries like Germany and Japan to implement developmental goals.
• Projects are now underway in countries such as Cameroon, Ghana, Malawi, and Peru, focusing on sectors like energy, education, and healthcare.

Conclusion

While LoCs have historically underpinned its engagement, changing financial realities, sovereign debt pressures, and a shifting aid landscape necessitate a strategic reset.

The Global Development Compact and the embrace of Triangular Cooperation represent forward-looking solutions.