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 Rs 60 crore, reflecting frosty bilateral ties.
Bhutan has been allocated the largest share -- Rs 2,288 crore -- as development aid, followed by Rs 800 crore to Nepal and Rs 550 crore each to the Maldives and Mauritius.
The Ministry of External Affairs (MEA) has been given a total of Rs 22,118 crore as against the current fiscal's budget estimate of Rs 20,516 crore and revised estimate of Rs 21,742 crore.
For the next fiscal, the allocation for Bangladesh has been pegged at Rs 60 crore. While the budget allocation to Bangladesh for 2025-26 was Rs 120 crore, the revised estimate put the amount at Rs 34.48 crore.
In a departure from the last few years, no allocation has been made for the Chabahar port project. In last year’s budget, Rs 100 crore was set aside for the port project, which was increased to Rs 400 crore in the revised estimate.
India has been making an annual outlay of Rs 100 crore to the mega connectivity project in Iran’s Sistan-Balochistan province over the last several years.
In September last year, the US imposed economic sanctions on Iran but granted India a six-month exemption for the Chabahar port project. The waiver will end on April 26.
The Chabahar port is being developed by India and Iran to boost connectivity and trade ties and to serve as a key part of the International North-South Transport Corridor (INSTC).
The total overseas development partnership portfolio for 2025-26 under the MEA has been pegged at Rs 6,997 crore, which is over 31 per cent of the ministry’s total allocation.
Out of this amount, Rs 4,548 crore has been earmarked for immediate neighbours. The funds will support projects ranging from large infrastructure works to community-level development initiatives.
According to revised estimates for 2025-26, Bhutan was allocated Rs 1,950 crore.
In continuation of India’s special relationship with Afghanistan, an allocation of Rs 150 crore has been made for 2026-27, compared to Rs 100 crore in 2025-26.
Sri Lanka has been allocated Rs 400 crore, while Myanmar will receive Rs 300 crore.
The total assistance for Latin American countries in the 2026-27 budget has been pegged at Rs 120 crore.