The government on Sunday has allocated Rs 5,685.56 crore as grants-in-aid to foreign countries in the Union Budget 2026–27. Bhutan emerged as the largest beneficiary, while no funds have been set aside for the strategically important Chabahar Port project in Iran.
The Ministry of External Affairs (MEA) has been allotted a total outlay of Rs 22,118 crore for 2026–27, up from the budget estimate of Rs 20,516 crore and the revised estimate of Rs 21,742 crore in the current fiscal.
Of the total allocation, Rs 5,685.56 crore has been earmarked under the “Central Sector Schemes/Projects – Aid to Countries” head.
Bhutan received the highest allocation of Rs 2,288 crore as development assistance, reaffirming India’s continued focus on its closest neighbour. Nepal followed with an allocation of Rs 800 crore, while the Maldives and Mauritius were allotted Rs 550 crore each.
Aid to Bangladesh has been pegged at Rs 60 crore for 2026–27. The allocation marks a sharp reduction from the budget estimate of Rs 120 crore in 2025–26, though it is higher than the revised estimate of Rs 34.48 crore for the current year.
The cut comes amid strained bilateral ties following political unrest in Bangladesh, including attacks on minorities and protests targeting Indian diplomatic interests.
The cut comes amid strained bilateral ties following political unrest in Bangladesh, including attacks on minorities and protests targeting Indian diplomatic interests.
In a notable departure from recent years, no allocation has been made for the Chabahar Port project in Iran. In the 2025–26 Budget, Rs 100 crore had been earmarked for the project, which was later increased to Rs 400 crore in the revised estimate.
The move comes against the backdrop of renewed US sanctions on Iran and uncertainty over the continuation of Washington’s waiver for India’s involvement in the project, which is set to expire on April 26.
The Chabahar Port, jointly developed by India and Iran, is viewed as a critical gateway for trade and connectivity to Afghanistan, Central Asia and Russia, and a key component of the International North-South Transport Corridor (INSTC).
Former finance minister P Chidambaram criticising the Centre for making no allocation for the Chabahar port in the Union Budget, alleged that the government was “succumbing to somebody’s pressure.” The remarks were made by Congress leader while addressing a press conference.
The total overseas development partnership portfolio for 2025–26 has been pegged at Rs 6,997 crore, accounting for a little over 31 per cent of the MEA’s overall allocation.
According to officials, the funds will be used for a range of initiatives, from large infrastructure projects such as hydroelectric plants, power transmission lines, housing, roads and bridges to grassroots-level community development programmes.
Sri Lanka has been allocated Rs 400 crore in the 2026–27 Budget, while Myanmar received Rs 300 crore. Assistance to Afghanistan was raised to Rs 150 crore from Rs 100 crore in the current fiscal, continuing India’s development engagement with the country.
Aid to African countries remained unchanged at Rs 225 crore, while allocations for Latin American countries have been pegged at Rs 120 crore. Disaster relief assistance to foreign countries stood at Rs 80 crore.
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