Budget 2026 highlights: India cuts aid for Iran's Chabahar Port to zero— what's in store for Bangladesh, Maldives

Finance Minister Nirmala Sitharaman on Sunday made no allocation for the Chabahar Port in Iran in the Union Budget 2026. The Budget document revealed that while Bhutan received the highest allocation at ₹2,288 crore, Chabahar Port received no funding, unlike in previous years.

In FY2024-25, the government had set aside ₹400 crore for the Chabahar Port project in Iran. In FY2025-26, the allocation initially stood at ₹100 crore, later revised to ₹400 crore.

The decision comes at a time when India is navigating complex geopolitical and trade pressures. In September, the US imposed strict economic sanctions on Iran but granted India a six-month extension to its participation in the Chabahar Port project. This exemption will end on 26 April 2026.

Sources suggest that India has been considering various options for the project following warnings from the Trump administration about a potential 25% tariff on nations engaging with Tehran.

The pause in allocation comes despite India and Iran signing a 10-year agreement to develop the strategically significant Chabahar Port.

The project is considered vital for India’s access to Afghanistan and Central Asia while bypassing Pakistan. The long-term agreement grants India the operations of the Shahid Beheshti terminal in Chabahar.

How much did other neighbours get?

The budget allocation under “Aid to Countries” was increased to ₹5,686 crore in FY 2026-27, about 4% higher than last year’s Budget Estimates of ₹5,483 crore.

However, the outlay was around ₹100 crore lower than the ₹5,785 crore provided in the Revised Estimates for 2025–26.

The allocation for Bangladesh was halved compared to the amount given in FY 2025-26. In the Budget 2025-26, Bangladesh was allotted ₹120 crore.

That number, however, was reduced to ₹34 crore in the revised estimate. This year, the violence- and protest-hit country has been allotted ₹60 crore.

Meanwhile, Bhutan remains the largest recipient of Indian aid, with its allocation rising by about 6% to ₹2,289 crore.

Nepal’s allocation increased to ₹800 crore, while Sri Lanka’s aid rose by about one-third to ₹400 crore.