Indicating a freeze on India’s activities in the port of Chabahar, the Union Budget has made no allocation for the port in Iran in 2026-27. Chabahar had received ₹400 crore in allocation in the previous fiscal. Earlier in January, Indian officials here had stated New Delhi remains engaged with Tehran and Washington D.C. to work out a solution after American President Donald Trump announced on January 12 that any country that trades with Iran will end up paying 25% additional tariffs while trading with the U.S.

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Union Budget 2026 LIVE

The downturn in India’s relations with Bangladesh is also reflected in the Budget, with allocation halved to ₹60 crore (from ₹120 crore) for projects in Bangladesh in the coming year

Bhutan continued to top allocation at ₹2,288.55, an increase of ₹138. 56 crore over last year. India’s annual allocation for Bhutan supports several developmental activities and infrastructure projects.

Myanmar, another conflict-hit country in India’s neighbourhood, has also seen a cut in allocation, down to ₹300 crore this year from last year’s ₹350 crore.

Sri Lanka, on the other hand, receives ₹400 crore this year, an increase of ₹100 crore.

Nepal, which experienced political turbulence in 2025, has received ₹800 crore, an increase of ₹100 crore over the allocation last year.

The Ministery of External Affairs has been allocated ₹1,292 crore for international training programmes that are increasingly being seen as an important part of India’s soft diplomacy. Officials from other countries are trained in these programmes, which form a bridge between the Indian and foreign states.