NEW DELHI: The government has allocated Rs 6,750 crore to the Ministry of External Affairs (MEA) for overseas development projects in the 2025 Union Budget, marking a 20% increase over the Rs 5,667 crore allocated in the previous year. India’s international development efforts are carried out through various mechanisms such as Lines of Credit, the Concessional Finance Scheme, and Grant-in-Aid projects, with the objective of strengthening its geopolitical interests.
The Indian funding supports infrastructure projects and capacity building projects. A significant 64% of the allocated funds for external development projects will be directed towards India's immediate neighbours under the ‘Neighbourhood First’ policy.
Bhutan remains the largest recipient of India’s foreign aid, with an allocation of Rs 2,150 crore for 2025-26, up from Rs 2,068 crore last year. Despite a reduction in overall foreign aid, Bhutan continues to be India’s key development partner, with funding focused on infrastructure, hydropower projects, and economic cooperation.
India has also increased its aid to the Maldives, raising the allocation from Rs 470 crore to Rs 600 crore. This increase coincides with the Maldives’ efforts to reset its ties with India.
In contrast, India has halved its aid to Afghanistan, reducing the allocation from ₹200 crore to ₹100 crore. This cut reflects India’s cautious approach focusing primarily on humanitarian assistance and economic cooperation, particularly regarding the Chabahar Port in Iran.
India’s aid to Myanmar has been reduced from Rs 400 crore to 3350 crore due to ongoing political instability. Meanwhile, aid to Nepal remains steady at Rs 700 crore, and Sri Lanka’s allocation remains unchanged at Rs 300 crore as it recovers from an economic crisis. Bangladesh’s aid stands at ₹120 crore despite diplomatic tensions. Aid to African nations increases to Rs 225 crore, reflecting India’s intent to step up its influence in the region.
The External Affairs Ministry has received an overall allocation of Rs 20,516 crore in the 2025-26 Budget, which represents a 15% increase over last year’s funding. This includes a 9% increase for the establishment of 10 new diplomatic missions and posts abroad.
The budget also includes a Rs 1,970 crore allocation to upgrade passport services nationwide. This represents a 97% increase in funding, aimed at improving the efficiency of passport services to meet growing demand.