Budget 2026: No funds for Chabahar Port, Bangladesh aid cut sharply

India has not allocated funds for the Chabahar port project in Iran in the Union Budget for 2026-27 and has halved the development assistance for Bangladesh to ₹60 crore in reflection of frosty bilateral ties.

Bhutan has been allocated the largest share — ₹2,288 crore — as development aid, followed by ₹800 crore to Nepal and ₹550 crore each to the Maldives and Mauritius.

The Ministry of External Affairs (MEA) has been given a total of ₹22,118 crore as against the current fiscal’s budget estimate of ₹20,516 crore and revised estimate of ₹21,742 crore.

For the next fiscal, the allocation for Bangladesh has been pegged at ₹60 crore. While the budget allocation to Bangladesh for 2025-26 was ₹120 crore, the revised estimate put the amount at ₹34.48 crore.

In a departure from the last few years, no allocation has been made for the Chabahar port project. In the budget last year, an amount of ₹100 crore was set aside for the port project in Iran and the amount increased to ₹400 crore in the revised estimate.

India has been making an annual outlay of ₹100 crore to the mega connectivity project in the Sistan-Balochistan province on Iran’s southern coast in the last several years.

In September last year, the US imposed crippling economic sanctions on Iran but had granted India a six-month exemption from the punitive measures on the Chabahar port project. The waiver will come to an end on April 26.

The Chabahar port is being developed by India and Iran to boost connectivity and trade ties. Both countries are also strongly pitching for making the port an integral part of the International North-South Transport Corridor (INSTC).

The total overseas development partnership portfolio for 2025-26 under the MEA’s allocation has been pegged at ₹6,997 crore, which is a little over 31% of the allocation made to the MEA.

Interestingly, out of the total allocation under the overseas development partnership portfolio, ₹4,548 crore has been earmarked for immediate neighbours.

The amount is expected to be spent towards implementation of a variety of initiatives ranging from large infrastructure projects such as hydroelectric plants, power transmission lines, housing, roads, bridges to small-scale grass-roots level community development projects, according to officials.

According to revised estimates for 2025-26, Bhutan was allocated an amount of ₹1,950 crore.

Also Read | Union Budget 2026: Urban development allocation set at ₹85,522 crore, down 12% from last year

In continuation with India’s special relationship with the people of Afghanistan, an allocation of ₹150 crore has been made to that country.

The allocation to Afghanistan for 2025-26 was ₹100 crore.

While Sri Lanka has been allocated ₹400 crore, an amount of ₹300 crore has been set aside for Myanmar.

The total assistance for Latin American countries in the budget for 2026-27 has been pegged at ₹120 crore.