India Halves Bangladesh Aid Amid Diplomatic Tensions
- By Thetripurapost Desk, New Delhi
- Feb 01, 2026
- 603
India has sharply reduced financial assistance to Bangladesh in the Union Budget for 2026–27, cutting the allocation by 50% to ₹60 crore, down from ₹120 crore in the previous fiscal year. The move comes against the backdrop of worsening bilateral relations, concerns over attacks on minorities in Bangladesh, and Dhaka’s growing engagement with Pakistan.
According to budget documents, the reduction reflects a broader recalibration of India’s external assistance policy at a time of shifting regional dynamics following the fall of Sheikh Hasina’s government in 2024.
Minority Safety a Key Concern
The Ministry of External Affairs (MEA) has repeatedly flagged violence against minorities in Bangladesh, particularly the Hindu community. On January 29, the MEA informed the Rajya Sabha that India is closely monitoring reports of attacks on minority homes, businesses, religious sites, and properties.
Minister of State for External Affairs Kirti Vardhan Singh said India has raised the issue at both political and diplomatic levels. Prime Minister Narendra Modi also discussed minority protection with Bangladesh’s Chief Adviser Muhammad Yunus during their meeting on April 4, 2025.
The MEA has criticised Bangladesh’s interim government for downplaying such attacks as personal or political disputes, warning that this approach emboldens perpetrators and deepens insecurity among minorities.
Bangladesh–Pakistan Rapprochement
Ties between India and Bangladesh have further deteriorated amid Dhaka’s renewed engagement with Pakistan—an especially sensitive development given the legacy of the 1971 Liberation War.
Direct cargo flights between Bangladesh and Pakistan have resumed, and passenger services are expected to begin soon. Pakistani airlines Fly Jinnah and Air Sial have received approvals, with a Dhaka–Karachi flight recently marking the first direct air link in 14 years.
Cuts for Maldives and Myanmar, Increase for Bhutan
Bangladesh is not the only neighbour facing reduced Indian assistance:
Maldives: ₹550 crore, lower than last year
Myanmar: ₹300 crore, also reduced
Bhutan: ₹2,288.55 crore, an increase of about ₹138 crore from the previous budget
India has also earmarked:
₹225 crore for African countries
₹120 crore for Latin American countries
₹380 crore for Eurasian countries
Country-wise breakups for these regions have not been specified.
MEA Budget Overview
The total allocation for the Ministry of External Affairs in 2026–27 stands at ₹22,118 crore, marginally higher than last year. Of this:
Around ₹9,500 crore will be spent on embassies, missions abroad, the MEA secretariat, and passport and immigration services.
₹5,685.56 crore has been allocated for foreign aid, about ₹100 crore less than in 2025–26.
No Allocation for Chabahar Port
Notably, the budget makes no provision for Iran’s Chabahar Port project, to which India had been contributing roughly ₹100 crore annually. The decision follows tighter US sanctions on Iran.
US President Donald Trump recently warned that countries engaging in trade with Iran could face tariffs of up to 25%. India’s six-month exemption for Chabahar is set to expire on April 26, prompting New Delhi to reassess its involvement.
Defence Spending Rises Sharply
In contrast to cuts in foreign assistance, India has significantly increased defence spending. The defence budget has risen from ₹6.81 lakh crore to ₹7.85 lakh crore, a 15.2% increase.
Key allocations include:
₹2.19 lakh crore for weapons acquisition and modernization (22% rise)
₹64,000 crore for aircraft and aero-engine development
₹25,000 crore for the naval fleet
₹1.71 lakh crore for defence pensions
The increased defence outlay reflects heightened geopolitical tensions and India’s focus on military readiness following recent regional security challenges.