Finance minister Jaswant Singh on Friday announced a new initiative to leverage and promote the country's strategic economic interests abroad.

Simultaneously, he signalled that the government will not depend on international aid, and instead, put in place a new mechanism for receiving official development assistance.

Launching a new 'India Development Initiative', Singh said that it would be used to promote the country as both a production centre and an investment destination.

The initiative would be established in the finance ministry with an allocation of Rs 200 crore (Rs 2 billion) for 2003-04.

"I am happy to announce that the government proposes to generally discontinue the practice of extending loans or credit lines to fellow developing countries. Instead, in future, I propose to utilize the India Development Initiative for providing grants or project assistance to developing countries in Africa, South Asia and other parts of the developing world," he said.

He also said that the government was considering a debt relief package for heavily indebted poor countries. The package would be announced shortly in consultation with the external affairs ministry.

The government has proposed to generally discontinue the practice of extending loans or credit lines to fellow developing countries.

Instead, the India Development Initiative would be used to provide grants or project assistance to developing countries in Africa, South Asia and other parts of the developing world, Singh said.

The finance minister said that the government would review its dependence on external donors and would no longer receive any 'tied aid'.

The government would now prefer to provide relief to certain bilateral partners with smaller assistance packages, so that their resources can be transferred to specified non-governmental organisations in greater need of official development assistance.

"The current agreed programmes will, however, continue and reach their completion. Of course, there will be no more 'tied aid' any longer," Singh said.