India has reshaped its overseas development assistance in the Union Budget 2026–27 and, for the first time, has not allocated for the Chabahar port project. The move signals New Delhi’s cautious approach amid renewed US sanctions on Iran and growing geopolitical pressure. The Chabahar port, jointly developed by India and Iran, has been seen as a strategic project to boost regional connectivity and trade. However, the Budget 2026–27 does not earmark any funds for it, marking a clear shift from previous years.
Chabahar is meant to improve access to Iran, Afghanistan, Central Asia and beyond. India and Iran have also pushed for its integration into the International North-South Transport Corridor (INSTC), a 7,200-km multi-modal trade route linking India with Russia, Europe and Central Asia.
Past Funding Pattern
In earlier budgets, India had consistently allocated around Rs 100 crore annually for the Chabahar project in Iran’s Sistan-Balochistan province, where India has been a key development partner. The US imposed strict economic sanctions on Iran last September but gave India a six-month waiver to continue work on Chabahar. That exemption is set to expire on April 26, adding uncertainty around the project’s future.
India–US Talks Ongoing
External Affairs Ministry spokesperson Randhir Jaiswal recently confirmed that India is in active discussions with the US regarding the Chabahar project. Sources say India is reviewing its options after warnings of additional US tariffs on countries doing business with Iran.
Bangladesh Aid Cut Sharply
Bangladesh has seen one of the steepest cuts in Indian foreign aid. Its allocation has been reduced from Rs 120 crore to Rs 60 crore, reflecting strained ties. Of the earlier allocation, only Rs 34.48 crore was actually spent.
Bhutan Remains Top Aid Recipient
Bhutan continues to receive the highest share of Indian assistance, followed by Nepal, Maldives and Sri Lanka. Overall, India’s “Aid to Countries” budget has risen to Rs 5,686 crore, about 4% higher than last year’s Rs 5,483 crore.
