Denmark has been giving bilateral development assistance to India since 1963. The assistance has been in the form of soft loans and grants. Tied grants were meant for large value projects and untied ones for local cost projects. At present the bilateral development assistance from Denmark (through DANIDA) is entirely in grant for the Social Sector Projects. As per the ‘Phasing Out’ policy adopted by Denmark, the Danish aid is now tapering of and is due to be phased out completely by 2008. The earlier loans were mainly extended for financing import of goods and services of Danish origin, basically for industrial projects. The loans were interest free repayable in 35 years with a grace period of 10 years involving a grant element 86% some of the major projects covered under loan assistance.
Denmark also provided Credit Lines in the form of interest-free loan with overall concessionality of 35%for the use of Private sector. Danida grants were used by Denmark for payment of interest on the loan portion to the Danish lending agency.
Tied Grants: Danish tied grants have been used for large value projects. Grant for PSD (Private Sector Development) Programme: This was one of the instruments for Industrial Development to support long term collaborations between Danish and Indian business enterprises. Social Sector grant: Denmark also provides grants for local cost projects in the areas of poverty alleviation covering sectors like Agriculture, Rural Water & Sanitation Health and Environment etc.
Grants to NGOs: Grant assistance is also available to NGOs such as CAPART and FRLHT under the bilateral aid schemes to India. The grant is passed to them through the Foreign Contribution Regulation Act (FCRA) rout. In 1989 Govt. of India signed a new Agreement which provides various facilities available to expatriate advisers attached to Indo-Danish projects in India and training programmes offered by Denmark to Indian personnel attached to Danish projects. In accordance with the latest policy on bilateral development cooperation enunciated by India in February 2003, India shall not receive bilateral development assistance from Denmark.