According to budget documents presented in Parliament, India has reduced aid not only to Bangladesh but also to the Maldives and Myanmar. The Maldives has been allotted ₹550 crore, lower than last year’s allocation, while Myanmar will receive ₹300 crore. In contrast, Bhutan has emerged as the biggest beneficiary among India’s neighbours, with its allocation increased to ₹2,288.55 crore, around ₹138 crore more than the previous year.

The reduction in aid to Bangladesh coincides with growing diplomatic concerns. Ties between New Delhi and Dhaka have been under pressure following reports of violence against minority communities, particularly Hindus, in Bangladesh. The situation has drawn repeated attention from the Ministry of External Affairs (MEA), which has stated in Parliament that India has consistently raised the issue with Bangladeshi authorities at the highest levels.

Adding to the strain is a shift in Bangladesh’s foreign policy following the fall of Sheikh Hasina’s government in 2024. The current administration has moved to strengthen relations with Pakistan, including the resumption of direct cargo shipping and air connectivity after more than a decade. Direct flights between Dhaka and Karachi have recently resumed, signalling a broader recalibration of Dhaka’s regional engagement.

The Union Budget has earmarked a total of ₹22,118 crore for the Ministry of External Affairs for 2026–27, slightly higher than last year. Of this, around ₹9,500 crore will be spent on the functioning of the MEA, including embassies, missions abroad, passport services and administrative expenses. Financial assistance to foreign countries stands at ₹5,685.56 crore, about ₹100 crore less than the previous year.

Region-wise, India has allocated ₹2.25 billion for African countries, ₹1.2 billion for Latin America and ₹3.8 billion for Eurasia, though country-specific breakups have not been disclosed.

Notably, the budget has made no allocation for Iran’s Chabahar Port project, which had earlier received around ₹100 crore annually. The move follows fresh US sanctions on Iran and a warning that countries engaging in business with Tehran could face additional trade penalties. India’s temporary exemption for Chabahar is due to expire in April.

Despite selective cuts, New Delhi maintains that overseas development assistance remains a key pillar of its foreign policy, aimed at strengthening regional stability, expanding economic partnerships and reinforcing India’s role in the Global South.