By N. C. Bipindra

New Delhi: India’s foreign ministry has ended its funding to Chabahar port in 2026-27, following US threat to impose tariffs on nations doing business with Iran.

India’s Union Budget 2026-27 papers show India allocated no money for Chabahar port development for the next fiscal, just a year after it hiked the spending for the project by four times to INR 400 crore from the allocated INR 100 in 2025-26.

The Ministry of External Affairs funding for Chabahar was part of India’s aid to friendly countries and regions, and was classified under the ministry’s revenue expenditure in the previous years.

US Tariffs Pressure on Nations Doing Business with Iran

Earlier this month, US President Donald Trump warned a 25% tariff on nations doing business with Iran, after threatening to militarily intervene there in support of anti-government protesters.

He did not clarify if the previous US exemption given to India for Chabahar port development would continue.

India has in the recent years reduced its oil imports from Iran, and has heavily relied on Russia for its energy needs, following sanctions pressure from the US.

Recalcitrant Bangladesh Aid Reduced Significantly

However, in the case of Bangladesh, with which India’s ties have deteriorated since the ouster of former Prime Minister Sheikh Hasina in late 2024 and her asylum in New Delhi, the aid was reduced by half to Rs 60 crore that last year’s allocation of 120 crore.

In fact, India spent only one-third of its allocated aid money for Bangladesh in the current fiscal under the revised budget, amounting to Rs 34.48 crore.

Maldives Favoured Through Indian Support

Also interesting was the fact that India increased its support for Maldives, where its President Mohamed Muizzu won the 2023 elections on an anti-India plank, but has since improved Male’s ties with New Delhi.

India spent more than the 2025-26 budgeted aid of Rs 600 crore by adding another Rs 26 core to the spending, and reduced the aid for 2026-27 to Rs 500 crore.

Neighbours First Policy Works in South Asia

However, other countries that have got India support have seen a study rise in the aid amount budgeted.

Support to Afghanistan grew by 50% from Rs 100 crore in FY26 to Rs 150 crore in FY27.

Since the Taliban takeover in 2021, India had steadily built its ties with the rulers in Kabul, and the two sides had just months ago decided to upgrade each other’s mission by posting senior diplomats to head them.

Bhutan, which faces a similar military threat from China from its occupied territory of Tibet, saw a steady rise in the aid from Rs 2,150 crore this fiscal to Rs 2,288 crore next fiscal.

India, under a bilateral agreement, has gone in support of Bhutan, with its military whenever it had faced a crisis in defending its territory from Chinese PLA, such as the Doklam crisis in 2013.

MEA Budget Goes Up by 7.8% in FY27

The Union Budget, presented by Finance Minister Nirmala Sitharaman in parliament, increased the budgetary allocation for MEA by 7.8% to Rs 22,118 crore from FY26’s Rs 20,516 crore.

MEA’s capital expenditure too witnessed a nearly 50% increase from Rs 996.88 crore to Rs 1,412 crore in FY27.

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