New Delhi: India’s close partner Bhutan again garnered the largest share of the government’s external aid portfolio, with an outlay of ₹2,150 crore in the budget for 2025-26, which retained an allocation of ₹100 crore for developing Iran’s Chabahar port.
The external affairs ministry was allocated ₹20,516.61 crore, lower than its revised budget of ₹25,277 crore and its allocation of ₹22,154 crore in 2024-25, according to the budget documents.
In keeping with the government’s “Neighborhood First” policy, Bhutan was allocated ₹2,150 crore from the total external aid outlay of ₹6,750 crore, including soft loans and grants, for foreign countries, cultural and heritage projects and support for international training programmes.
Last year, India announced the doubling of its financial support for Bhutan’s five-year plans from ₹5,000 crore to ₹10,000 crore.
The overseas development portfolio of Rs. 6,750 crore accounted for a third of the ministry’s overall budget. This is an increase of nearly 20% over last year’s allocation of ₹5,667.56 crore and in line with foreign policy objectives and an expanding development partnership footprint, officials said.
Almost 64% of the portfolio of ₹4,320 crore for development schemes has been earmarked for India’s immediate neighbours with an eye on demand-driven initiatives, ranging from large infrastructure projects, such as hydropower plants, power transmission lines, housing, roads, bridges, and integrated check posts, to small-scale grassroots community development projects and training programmes.
The allocations for other foreign countries included ₹700 crore for Nepal, ₹600 crore for the Maldives, ₹500 crore for Mauritius, ₹350 crore for Myanmar, ₹300 crore for Sri Lanka, ₹225 crore for African nations, ₹120 crore for Bangladesh, ₹100 crore for Afghanistan, and ₹150 crore for other developing countries.
The outlays for Bangladesh and Nepal remained unchanged from the figures for the last fiscal, while the allocations for the Maldives, Myanmar, Mauritius and Sri Lanka were increased over the figures for 2024-25.
The allocation for Afghanistan was halved from the ₹200 crore provided in 2024-25, while the outlay for the Maldives was increased from ₹400 crore in 2024-25 to ₹600 crore for 2025-26.
India played a key role in helping the Maldives tide over a balance of payments problem in 2024 by resubscribing to certain bonds and extended other financial support. This has come at a time when the Indian Ocean archipelago has not received much financial support from China, to which the Maldivian leadership has turned for defence, security and trade cooperation.
The continuing outlay of 100 crore for Chabahar port reflects the importance of the facility in regional connectivity efforts, especially the International North-South Trade Corridor. Last year, India and Iran signed a 10-year pact for operations at Shahid Beheshti terminal of Chabahar port, where an Indian state-run company is active. Besides a commitment to invest $120 million to acquire equipment for port operations, India offered a credit window of $250 million for developing infrastructure around the deep-sea port in the Gulf of Oman.
The total assistance for Latin America and Eurasia in the budget for 2025-26 was pegged at ₹100 crore, double the outlay for the current fiscal.
However, the overall allocation of ₹20,516.61 crore for the external affairs ministry does not include any outlay towards EXIM Bank provisioning. The provisioning for EXIM Bank is a dynamic process and may be done at a later phase if the need arises, officials said.
With the external affairs ministry operationalising ten new missions and posts abroad during fiscal 2024-25, the outlay on this count was increased by around 9% to ₹4,206 crore for 2025-26.
The outlay for citizen-centric initiatives, including the issuance of passports, e-personalisation of passports and implementation of version 2.0 of the Passport Seva Project, was increased by 97% from ₹970 crore in 2024-25 to Rs. 1,913 crore for 2025-2026.
The external affairs ministry’s total outlay includes expenses on embassies and missions, passport and emigration, external aid for countries and projects abroad, and contributions to bodies such as the Indian Council of Cultural Relations (ICCR) and the South Asian University.