India Cuts Bangladesh Aid, Drops Chabahar Funding in Budget
In the Union Budget 2026-27, India halved development assistance to Bangladesh and made no allocation for the Chabahar port project in Iran, signalling a shift in its overseas aid priorities. The aid to Bangladesh was reduced from ₹120 crore last year to ₹60 crore in the new budget, reflecting a significant decrease in bilateral assistance. The Chabahar port outlay, which had been included in previous budgets, was omitted entirely this fiscal year.
Foreign Aid Priorities Change
The Ministry of External Affairs saw a modest increase in its overall budget, but funding for key external development projects changed sharply. Bhutan remained the largest beneficiary of Indian foreign aid, while allocations for other neighbours were adjusted. Analysts say the Chabahar decision comes amid increased US sanctions on Iran, which may have influenced India’s budget stance on funding the strategic Indian-Iran project.
Diplomatic and Strategic Implications
The cut in Bangladesh aid comes at a time of strained ties between New Delhi and Dhaka, with both governments navigating complex political and regional dynamics. The absence of Chabahar funding raises questions about India’s future role in the India–Iran–Afghanistan transport link, though official policy statements emphasise compliance with international sanctions and diplomatic considerations.
