The Ministry of External Affairs (MEA) has allocated Rs 5,483 crore for foreign aid in the Union Budget for 2025-26, a slight decrease from last year’s revised allocation of Rs 5,806 crore. The overall budget for the MEA is Rs 20,516 crore, with a significant portion dedicated to assisting neighbouring and strategic countries.

Bhutan remains top recipient

Bhutan continues to be the largest recipient of India’s foreign aid, receiving Rs 2,150 crore for 2025-26, up from Rs 2,068 crore last year. Despite the reduction in overall aid, Bhutan remains India’s key development partner, with funds directed towards infrastructure, hydropower projects, and economic cooperation.

Maldives aid rises amid diplomatic reset

India has increased its aid to the Maldives from Rs 470 crore to Rs 600 crore. This boost comes as the Maldives seeks to mend relations with India following tensions over President Mohamed Muizzu’s pro-China stance after his electoral victory. The recent visit of Maldivian Defence Minister Ghassan Maumoon to India signals renewed efforts to restore bilateral cooperation.

Afghanistan’s aid cut

Afghanistan’s aid allocation has halved, dropping from Rs 200 crore last year to Rs 100 crore in 2025-26. This is a significant reduction from the Rs 207 crore allocated two years ago. India has been cautious in its engagement with Afghanistan under the Taliban regime, providing humanitarian assistance and fostering economic cooperation, particularly with regards to the Chabahar Port in Iran.

Myanmar’s aid reduced

India’s aid to Myanmar has been reduced from Rs 400 crore in the revised 2024-25 budget to Rs 350 crore for 2025-26, due to ongoing political instability in the country. The Indian government has also implemented stricter border movement regulations, reducing the free movement regime from 16 km to 10 km along the India-Myanmar border.

Other Key Allocations

  • Nepal continues to receive Rs 700 crore, while Sri Lanka maintains an allocation of Rs 300 crore as the country recovers from an economic crisis.
  • Bangladesh sees no change in its aid allocation of Rs 120 crore despite a diplomatic rift following the ouster of former Prime Minister Sheikh Hasina.
  • Aid to African nations rises to Rs 225 crore from Rs 200 crore, in line with India’s expanding influence in the region.
  • Latin America sees a reduction in aid, with allocation dropping from Rs 90 crore to Rs 60 crore.
  • The allocation for Chabahar Port in Iran remains steady at Rs 100 crore, supporting its role as a key trade route to Afghanistan and Central Asia.
  • Disaster Relief sees a slight increase from Rs 60 crore to Rs 64 crore, with India continuing its role as a key global responder to disasters.