Chabahar Port gets nothing in Sitharaman’s Budget amid US-Iran tensions; aid to Bangladesh halved

In what is seen as a direct outcome of the United States tightening the noose around Iran, there is no provision in the General Budget of Finance Minister Nirmala Sitharaman for the strategic Chabahar Port in Iran that provides India a crucial road link to Afghanistan bypassing Pakistan.

Also, India has halved the aid to Bangladesh amid the ongoing strain in ties with the neighbouring country.

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In the 2024-25 Budget, the Finance Minister had set aside Rs 400 crore for the project while Rs 100 crore was allocated to it in the 2025-26 Budget. In the revised estimates for 2025-26, the allocation was again increased to Rs 400 crore. However, this time around, the Finance Minister has played it safe amid the increasing tensions between the US and Iran and not allocated anything to the vital port project, which is aimed at increasing India’s trade links with Afghanistan and Central Asia.

The decision comes amid global fears that the US could attack the Islamic nation which has witnessed large-scale anti-government protests in recent days.

In September last year, the US had imposed fresh sanctions on Iran but granted a six-month waiver to India on the Chabahar project, keeping in view New Delhi’s plea that the project was meant for transporting humanitarian assistance to the war-ravaged people of Afghanistan. This exemption will end on 26 April, 2026 and India is said to be in touch with Washington in the matter.

Meanwhile, The Trump administration recently announced that it will slap 25 per cent tariffs on nations engaged in trade with Iran. Since then India, which is already fighting the punitive tariff regime unleashed by the Trump administration, has been considering various options. The move comes despite the fact that India had signed a ten-year agreement in 2024 to operate the Shahid Beheshti Terminal at Chabahar, which is crucial for direct access to Afghanistan.

Meanwhile, India has drastically reduced to Rs 60 crores its assistance to Bangladesh in the ‘’Aid to Countries’’ category. Bangladesh was allocated Rs 120 crores in the budget for 2025-26 but the allocation was reduced to Rs 34.48 crores in the revised estimates for that financial year.

The overall allocation under ‘’Aid to Countries’’ has been raised to Rs 5686 crores, some four per cent higher than last year’s revised estimates of Rs 5483 crores.

Bhutan continues to get a favoured nation treatment in view of its strong political and economic links with India. The Finance Minister has allocated Rs 2288.56 crores to Bhutan, up from Rs 1950 crores in the revised Budget for 2025-26.

The allocation for Afghanistan, where India is seeking to mend fences with the Taliban regime to secure regional interests, has also been increased from Rs 100 crores in the revised 2025-26 Budget to Rs 150 crores.