Union Budget 2026: Tension & sanctions show in aid card

Sunday's Budget had no allocation for Chabahar port in Iran under the 'aid to countries and projects abroad' outlay. This could be significant, coming amid looming threats of US sanctions over the port, which - in the absence of any direct land access - was meant to be India's gateway to Afghanistan and central Asia.

The allocation for neighbour Bangladesh - which goes to elections this month under a hostile interim govt - was halved to Rs 60 crore from the Rs 120 crore earmarked last year.




The Chabahar port has been hit by the US revocation last year of the 2018 sanctions waiver that allowed India to work on the project. While the US has extended the revocation deadline to April 26, there's little hope of another extension given the ongoing US campaign for maximum isolation of Tehran.

However, as govt sources said, India has already fulfilled its financial commitment to the port by transferring the $120 million it had promised for the project. The last tranche was transferred in Aug 2025. Official sources said there's no further financial obligation from the Indian side as far as funding is concerned.

India had signed a 10-year agreement with Iran in 2024 to equip and develop the Shahid Beheshti terminal at the port, under which it also committed to a $250 million line of credit for the project. That commitment still stands although it's not time bound as per the agreement.

While there have been reports that India is withdrawing from the port, which allows India access to central Asia bypassing Pakistan, the Indian govt has said it remains engaged with the Americans to work out the sanctions waiver arrangement. Use of the strategically located port is vital for India and was also one of the reasons it voted against a UN Human Rights Council resolution censuring Iran for its violent crackdown on protests in the country.

The total fund allocation for the MEA this year is Rs 22,118 crore, a substantial increase from Rs 20,516 crore last year. Total aid to countries jumped from Rs 5,483 crore to Rs 5,685 crore. The neighbouring countries that saw an increase in allocation included Bhutan, Afghanistan, Nepal and Sri Lanka.