New Delhi : India has significantly reworked its overseas development assistance in the Union Budget 2026-27 and, for the first time, made no allocation for the Chabahar port project, reflecting caution amid renewed US sanctions on Iran. The INSTC is a 7,200-km-long multi-mode transport project for moving freight among India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.
India had set aside Rs 100 crore annually for the major connectivity project in Iran’s southern Sistan-Balochistan province, where it remains a key development partner. Last September, the US imposed stringent economic sanctions on Iran but had granted India a six-month exemption for its involvement in the Chabahar project. That waiver is set to expire on April 26.
Sources indicate that India has been exploring various options for the project following the Trump administration’s warning of a 25% additional tariff on countries conducting business with Tehran.Bangladesh saw one of the steepest reductions in Indian foreign aid, with its allocation halved from Rs 120 crore to Rs 60 crore, reflecting strained bilateral relations. Of the Rs 120 crore allocated previously, only Rs 34.48 crore had been disbursed.
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