Our Bureau
New Delhi
India has sharply cut its external aid to Bangladesh and made no provision for the Chabahar port project in its Union Budget for 2026–27, signalling a recalibration of its neighbourhood and regional priorities. The move comes amid growing strains in ties with Dhaka and a broader shift in New Delhi’s approach to foreign‑assistance commitments.
The budget estimates show that assistance to Bangladesh has been reduced by about half compared with the previous financial year, according to government documents cited by media reports. Officials say the cut reflects a review of ongoing projects and a focus on those that align closely with India’s strategic and economic interests. Bangladesh has been one of the larger recipients of Indian concessional loans and grant‑based support in recent years, particularly for infrastructure and connectivity schemes.
At the same time, the 2026–27 budget does not include any fresh allocation for the Chabahar port project in Iran, which India had earlier promoted as an alternative trade route to Afghanistan and Central Asia. The absence of a line item has raised questions about the future pace of investment and India’s ability to compete with other powers active in the region. Analysts say the decision may be linked to both financial constraints and the need to prioritise domestic spending, especially in areas such as infrastructure and social welfare.
Diplomats note that the aid cut to Bangladesh and the Chabahar pause do not amount to a complete policy reversal but indicate a more selective use of India’s external resources. They add that New Delhi is likely to emphasise projects that yield clear connectivity, security, or trade benefits, while keeping channels of dialogue open with Dhaka and Tehran
