New Delhi : India slashed its budgetary allocation for developing Iran’s Chabahar port in the budget for 2026-27 to zero in the face of US sanctions and the outlay for development projects in Bangladesh was halved to ₹60 crore, reflecting the current strains in ties between the two sides.
Chabahar funding dropped, Bangladesh allocation halved as India reshapes external aid (Representative image)
Bhutan, a close development partner, again garnered the largest share of the government’s external aid portfolio, with an outlay of ₹2,288 crore, according to budget documents. This was marginally higher than the allocation of ₹2,150 crore in the budget for 2025-26.
The external affairs ministry was allocated ₹22,119 crore, slightly higher than its outlay of ₹20,517 crore in 2025-26.
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The overseas development portfolio of ₹6,998 crore accounted for almost a third of the ministry’s budget, and marked a slight increase over the last year’s allocation of ₹6,750 crore.
The allocation for Chabahar port, which was revised from ₹100 crore to ₹400 crore for 2025-26, was cut to nil for 2026-27.
A six-month exemption from US sanctions applicable to Chabahar port granted by the Trump administration in 2025 is valid only till April.
For Bangladesh, the development partnership outlay was cut from ₹120 crore for 2025-26 to ₹60 crore in 2026-27. India-Bangladesh ties have witnessed a downward spiral under the interim government in Dhaka, with New Delhi looking to reset the relations following Bangladesh’s general election on February 12.
The allocations for other countries included ₹800 crore for Nepal, ₹550 crore for Maldives, ₹550 crore for Mauritius, ₹400 crore for Sri Lanka, ₹225 crore for African nations and ₹120 crore for Latin American countries, among others.