Bangladesh aid cut by half; no fund for Chabahar Port in Union Budget 2026

India has revised its overseas development assistance in the budget, cutting aid to Bangladesh by half and making no allocation for the Chabahar Port project in Iran.

The overall assistance, which will be extended by the Ministry of External affairs (MEA), has seen a marginal increase in the budget.

The allocation under 'Aid to Countries' has been raised to ₹5,686 crore, about 4% higher than last year's budget estimates of ₹5,483 crore. MEA's total expenditure for 2026-27 is estimated at ₹22,119 crore.


As India is in talks to enter a unique arrangement to safeguard its rights in the Chabahar Port, there is no allotment for the port in Iran. India Ports Global Limited (IPGL), which has been managing the port since 2024 under a 10-year pact with Iran, is likely to have an arrangement with a local entity to manage the port with a guarantee that this right will be transferred back to India when sanctions are lifted.

New Delhi is seeking a guarantee from the Iranian government for this arrangement in the form of legal sanctity so that arrangements between the two port authorities are honoured. India had spent ₹400 crore on the project in 2024-25 and initially allocated ₹100 crore in the 2025-26 budget estimates, later raising it to ₹400 crore in the Revised Estimates.

The assistance allotment for Bangladesh saw a sharp reduction with its allocation cut from ₹120 crore to ₹60 crore. The reduction comes amid strained bilateral relations.

Bhutan remains the largest recipient of Indian aid, with its allocation rising by about 6% to ₹2,289 crore. Nepal's allocation increases by around 14% to ₹800 crore while Sri Lanka's aid rises by about one-third to ₹400 crore, highlighting India's role in the island nation's post-crisis recovery.

In the Indian Ocean Region, aid to the Maldives has been cut by about 8% to ₹550 crore while Mauritius has received a 10% increase to the same amount. Aid to Afghanistan remains unchanged at ₹150 crore. Myanmar's allocation is cut by about 14% to ₹300 crore while assistance to African countries is set at ₹225 crore. The budget doubles Latin America's allocation to ₹120 crore while it cuts funding for Eurasian countries slightly to ₹38 crore.