India has increased its development assistance to Afghanistan in its 2026–27 federal budget, allocating 150 crore rupees ($18 million) for the country, as New Delhi recalibrates its regional aid priorities amid shifting political dynamics in South Asia.
The allocation marks a rise in funding for Afghanistan under India’s “Neighbourhood First” policy, even as overall foreign assistance is selectively adjusted across the region, according to Indian media reports and budget documents.
India’s development aid to Afghanistan is channelled primarily through humanitarian assistance, capacity-building programmes and infrastructure support, as New Delhi does not formally recognise the Taliban government that returned to power in August 2021. Indian officials have said assistance is aimed at supporting the Afghan people rather than the authorities in Kabul.
The increased allocation comes as India has gradually expanded its engagement with Afghanistan in recent months. Last year, New Delhi upgraded the status of its mission in Kabul to an embassy, and in January Afghanistan introduced a new diplomat in the Indian capital. Indian officials have said contacts are focused on humanitarian relief and regional stability.
At the same time, India has sharply reduced aid to some other neighbours. Assistance to Bangladesh was cut by about 50% to 60 crore rupees, amid diplomatic strains following the removal of former prime minister Sheikh Hasina in 2024 and Dhaka’s growing engagement with Pakistan, Indian media reported.
India’s 2026–27 budget also increased development funding for Nepal to 800 crore rupees, Sri Lanka to 400 crore rupees, and Mongolia to 25 crore rupees, while allocations for the Maldives and Myanmar were reduced.
Overall, the budget reflects a selective reallocation rather than a retreat from regional engagement, analysts say, with funding prioritised for countries where India sees strategic or developmental opportunities. Projects typically supported through such aid include power infrastructure, roads, bridges and social development initiatives.
India’s total allocation for the Ministry of External Affairs rose marginally to 22,118.97 crore rupees, indicating limited overall growth in foreign spending even as funding for Afghanistan and some other neighbours increased.
New Delhi has previously described stability in Afghanistan as critical for regional security, while international organisations have warned that the country remains heavily dependent on external assistance amid economic collapse, sanctions and widespread humanitarian needs.
