BY RAMESH BHAN
New Delhi, Feb 2 (.) The 2026-27 Budget reflects India’s emphasis on its ‘Neighbourhood First Policy’ and a clever manoeuvre to deflect any negative impact on national interests, especially with no direct allocation for the strategically important Chabahar Port.
At first instance, it might seem that no allocation for the crucial Chabahar Port could be disadvantageous for India. But a closer scrutiny reveals that it is a clever move to offset any punitive action by the United States rather than an exit.
US President Donald Trump has warned of tariffs against any country which trades with Iran. Also, war clouds are hovering over Iran. The war may or may not happen, but the entire region is on tenterhooks.
The strategy behind the pause is the April 26, 2026, deadline when India’s current US sanctions waiver for the port is set to expire. By not earmarking new budgetary allocation, India has avoided any confrontation with the US sanctions regime.
It could appear that India may have temporarily withdrawn from Chabahar following US threats. But India has already transferred 120 million USD investment for the Behesti Terminal, with the final tranche given in August 2025. Also, India has extended a 250 million USD Line of Credit. Therefore, any new investment is not immediately required. Moreover, port operations are now self-sustaining through the revenue earned so far.
The Behesti Terminal is a key container and multi-purpose cargo facility developed by India in the Chabahar Port. As India’s first overseas port project, it offers a crucial strategic corridor to Afghanistan and Central Asia, bypassing Pakistan. India signed a 10-year agreement in 2024 to operate the terminal.
Strategic Expert Brahma Chellaney said on X ‘’Chabahar Port is India’s only viable route to Afghanistan and Central Asia that bypasses Pakistan. An Indian exit would almost certainly leave a vacuum for China to fill. The absence of funding for Chabahar in India’s 2026–27 Budget may therefore reflect a tactical freeze rather than a strategic retreat, given Washington’s April 26 deadline for India to wind down operations or face sanctions.’’
Chellaney said India has already transferred its principal commitment of 120 million USD towards the development of Chabahar’s Shahid Beheshti terminal. Because these funds are already “in the system,” a fresh budgetary allocation may not have been technically necessary at this stage.
Questions could arise whether any Indian silence would benefit Pakistan to India’s disadvantage, since Chabahar enables India to bypass Pakistan while conducting trade with Afghanistan and Central Asia. Any prolonged Indian hesitation could, indeed, benefit Pakistan as well as China. , and Indian withdrawal could leave open space for China to enter, as Chellaney says.
A diplomatic solution is, therefore, needed before the expiry of the April 26 waiver.
From that point of view, India’s withdrawal or even longer silence could give Pakistan a clear edge in the region and a lever to stall India’s International North-South Transport Corridor (INSTC) ambitions.
No allocation for Chabahar notwithstanding, the Ministry of External Affairs (MEA) saw an overall increase to Rs 22,118 crore in the Budget. This includes aid to specific countries based on their stability and development.
While Bhutan gets the maximum amount of Rs 2288 crore to support hydro-power, Afghanistan gets Rs 150 crore. Nepal gets Rs 800 crore for supporting its infrastructure development.
Bangladesh, which has witnessed anti-India sentiments and policies and attacks on Hindu minorities, has been allocated Rs 60 crore—half of what it was allocated last year. Maldives gets Rs 550 crore, and Sri Lanka gets Rs 400 crore.
The strategy behind India’s foreign aid allocations in the Budget revolves around three main pillars, including stability, protecting regional interests and offsetting the influence of rival powers in the region.
While the cutting of aid to Bangladesh can be explained, in the case of Afghanistan, an increase to Rs 150 crore from last year’s 100 crore seems quite modest, considering India’s close relations with the Afghan government and strategic interests in the region.
This is because the focus in Afghanistan has now shifted from infrastructure development to humanitarian aid and small-scale community projects. Also, the Taliban government has not been recognised, even though India has scaled up diplomatic ties with Afghanistan.
Chabahar Port is of immense strategic importance to India. It is the main maritime gateway to Afghanistan and Central Asia, bypassing Pakistan and is the only viable route for India to reach landlocked Afghanistan and Central Asia. It is located about 100 km from the Gwadar Port and reduces shipment costs by 60 per cent and transit time by 50 per cent. The port has been vital for shipping humanitarian assistance, including over 2.5 million tons of wheat and medical supplies to Afghanistan. It also strengthens India’s ties with Iran and Central Asian nations.
As of February 2026, India has fulfilled its primary financial commitments to the port’s development. The total historical pledges have reached between 500 million USD and 635 million USD. Over the past decade, India has invested approximately Rs 1,100 crore directly into the port’s development through annual outlays.
. RB 1813
