Budget 2026: India cuts Bangladesh aid by half, drops Chabahar port allocation to zero
Union Budget 2026: Bangladesh, which had an allocation of Rs 120 crore in the previous year's Budget Estimates, has been brought down to Rs 60 crore in 2026–27
- Feb 1, 2026,
- Updated Feb 1, 2026 3:25 PM IST
Union Budget 2026: Finance Minister Nirmala Sitharaman, in the Budget 2026, cut assistance to Bangladesh by half and set aside no money for the Chabahar port project in Iran.
Bangladesh, which had an allocation of Rs 120 crore in the previous year's Budget Estimates, has been brought down to Rs 60 crore in 2026–27. The bilateral relationship between New Delhi and Dhaka has taken a hit under interim head Muhammad Yunus, who assumed power in August 2024 after Sheikh Hasina fled Bangladesh.
Union Budget 2026 Live Updates
The overall 'Aid to Countries' outlay has been nudged up to Rs 5,686 crore, about 4% higher than last year's Budget Estimates of Rs 5,483 crore. But the 2026–27 allocation remains lower than the Revised Estimates for 2025–26, which stood at RS 5,785 crore.
The biggest surprise in the fine print is the complete pause on Chabahar funding. The Budget documents show no allocation for the project in 2026–27. India spent Rs 400 crore on Chabahar in 2024–25. In 2025–26, the government had budgeted Rs 100 crore for the project, before raising it to Rs 400 crore in the Revised Estimates. This year, the number drops to zero.
The decision comes even though India signed a 10-year agreement in 2024 to operate the Shahid Beheshti terminal at Chabahar, a connectivity project seen as strategically important for securing access to Afghanistan and Central Asia without routing through Pakistan. Moreover, US President Donald Trump earlier this year announced a 25% tariff on countries trading with Tehran.
In contrast to Bangladesh's reduction and the Chabahar pause, Bhutan continues to be the largest recipient of Indian aid. Its allocation has been raised by about 6% to Rs 2,289 crore. Nepal's allocation has been increased by around 14% to Rs 800 crore, while Sri Lanka receives Rs 400 crore — about one-third higher than earlier levels.
The Maldives sees an 8% cut to Rs 550 crore, while Mauritius is allocated the same Rs 550 crore after a 10% increase. Aid support for Afghanistan has been held steady at Rs 150 crore, with the outlay largely tied to humanitarian assistance. Myanmar's allocation is reduced by about 14% to Rs 300 crore.
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Union Budget 2026: Finance Minister Nirmala Sitharaman, in the Budget 2026, cut assistance to Bangladesh by half and set aside no money for the Chabahar port project in Iran.
Bangladesh, which had an allocation of Rs 120 crore in the previous year's Budget Estimates, has been brought down to Rs 60 crore in 2026–27. The bilateral relationship between New Delhi and Dhaka has taken a hit under interim head Muhammad Yunus, who assumed power in August 2024 after Sheikh Hasina fled Bangladesh.
Union Budget 2026 Live Updates
The overall 'Aid to Countries' outlay has been nudged up to Rs 5,686 crore, about 4% higher than last year's Budget Estimates of Rs 5,483 crore. But the 2026–27 allocation remains lower than the Revised Estimates for 2025–26, which stood at RS 5,785 crore.
The biggest surprise in the fine print is the complete pause on Chabahar funding. The Budget documents show no allocation for the project in 2026–27. India spent Rs 400 crore on Chabahar in 2024–25. In 2025–26, the government had budgeted Rs 100 crore for the project, before raising it to Rs 400 crore in the Revised Estimates. This year, the number drops to zero.
The decision comes even though India signed a 10-year agreement in 2024 to operate the Shahid Beheshti terminal at Chabahar, a connectivity project seen as strategically important for securing access to Afghanistan and Central Asia without routing through Pakistan. Moreover, US President Donald Trump earlier this year announced a 25% tariff on countries trading with Tehran.
In contrast to Bangladesh's reduction and the Chabahar pause, Bhutan continues to be the largest recipient of Indian aid. Its allocation has been raised by about 6% to Rs 2,289 crore. Nepal's allocation has been increased by around 14% to Rs 800 crore, while Sri Lanka receives Rs 400 crore — about one-third higher than earlier levels.
The Maldives sees an 8% cut to Rs 550 crore, while Mauritius is allocated the same Rs 550 crore after a 10% increase. Aid support for Afghanistan has been held steady at Rs 150 crore, with the outlay largely tied to humanitarian assistance. Myanmar's allocation is reduced by about 14% to Rs 300 crore.
Track live Budget updates, breaking news, expert opinions and in-depth analysis only on BusinessToday.in