Strategic Shift: India Zeroes Out Chabahar Port Funding Amid Escalating US Sanctions Pressure

In a decisive strategic recalibration, India's 2026 budget has eliminated all funding for the Chabahar port development project, reducing the allocation from previous years to zero. This move signals a significant pivot in New Delhi's foreign policy calculus, directly attributable to intensifying US sanctions regimes targeting Iran. Concurrently, development assistance to Bangladesh has been sharply reduced by 50%, down to ₹60 crore, underscoring broader regional diplomatic strains. Analysis indicates these budgetary adjustments reflect a deliberate balancing act: India is prioritizing compliance with international sanctions frameworks while reassessing its regional connectivity ambitions. The Chabahar decision, in particular, marks a substantial retreat from a long-touted gateway to Afghanistan and Central Asia, suggesting recalibrated risk assessments regarding secondary sanctions. The parallel reduction in Bangladesh funding further reveals multifaceted pressures on India's neighborhood diplomacy, potentially impacting bilateral infrastructure and development cooperation. This dual budgetary contraction presents a clear intelligence indicator of India's evolving strategic posture—accommodating Western alignment pressures while managing complex regional partnerships under increasingly constrained geopolitical and economic conditions.