 "Maldives President Mohammad Muizzu and Narendra Modi")
The Ministry of External Affairs (MEA) has allocated Rs 5,483 crore for foreign assistance in 2025-26, marking a slight reduction from Rs 4,883.56 crore allocated in the previous year. The MEA’s overall budget stands at Rs 20,516 crore, with aid to neighboring and strategic partners remaining a key focus.
Budget 2025: Bhutan remains the largest aid recipient
Bhutan retains its position as the top beneficiary of India’s foreign aid, receiving Rs 2,150 crore for the upcoming financial year. This marks an increase from Rs 2,068.56 crore allocated in 2024-25. In the revised estimates for 2024-25, Bhutan had received Rs 2,543.48 crore.
ALSO READ: 'No cut in capital expenditure': Nirmala Sitharaman post-Budget 2025
India remains Bhutan’s primary development partner, with funds directed toward infrastructure, hydropower, and economic collaboration.
Bangladesh: No increase in aid
India has maintained its aid to Bangladesh at Rs 120 crore despite diplomatic tensions following the departure of former Prime Minister Sheikh Hasina, who has been granted asylum in India. The new government, led by Muhammad Yunus, has called for her return.
Increased assistance to Maldives after diplomatic thaw
India’s financial support to the Maldives has risen from Rs 400 crore to Rs 600 crore. This increase coincides with Male’s efforts to strengthen ties with New Delhi following diplomatic strains after President Mohamed Muizzu’s election and his perceived pro-China stance.
Also Read
In the revised estimates for 2024-25, the Maldives was allocated Rs 470 crore.
In early 2024, India withdrew its military personnel from the Maldives. However, following a recent visit by Maldivian Defence Minister Ghassan Maumoon and President Muizzu to India, both nations are working towards restoring bilateral cooperation.
Budget 2025: Reduced aid to Afghanistan
India has reduced its financial assistance to Afghanistan from Rs 200 crore in the previous financial year to Rs 100 crore for 2025-26.
In the revised estimates for 2024-25, the ministry had allocated Rs 50 crore to Afghanistan.
India's engagement with Afghanistan has been primarily restricted to humanitarian and economic support due to ongoing concerns about the Taliban regime.
Earlier this year, senior Indian diplomat Vikram Misri held talks with Taliban representatives in Dubai — the highest-level interaction since Kabul’s takeover. The discussions focused on trade and India’s strategic interests in Iran’s Chabahar Port, a critical alternative trade corridor bypassing Pakistan. However, India has yet to formally recognize the Taliban-led government.
Reduction in Myanmar’s aid allocation
Amid ongoing conflict in Myanmar, India has increased its financial assistance from Rs 250 crore in 2024-25 to Rs 350 crore for 2025-26. Ethnic armed groups continue to gain control over large swathes of Myanmar, including territories bordering northeastern India.
Myanmar was allocated Rs 400 crore in the revised estimates for 2024-25. Additionally, the Indian government has tightened regulations on cross-border movement. The Free Movement Regime (FMR) now limits travel to 10 km on either side of the India-Myanmar border, down from the previous 16 km.
Union Budget 2025: Other key allocations
Nepal: Aid remains unchanged at Rs 700 crore.
Sri Lanka: Assistance stands at Rs 300 crore as the nation continues its economic recovery.
African Nations: Financial support has increased to Rs 225 crore from Rs 200 crore, aligning with the African Union’s inclusion in the G20 under India’s presidency in 2023.
Latin America: Funding has been increased to Rs 60 crore from Rs 30 crore in the last financial year.
Union Budget 2025: Strengthening soft-power initiatives
Beyond direct financial aid, India continues to enhance its global influence through cultural and training programs. The Indian Council for Cultural Relations (ICCR) has been granted Rs 351 crore, an increase from last year’s Rs 331 crore.
