India’s external assistance tilts towards Latin America; Chabahar shows Rs 400 crore write-off

Govt was increasing its Chabahar port allocation

• India's aid to Latin America increased from Rs 2.8 crore in FY23 to Rs 120 crore in FY27.
• Chabahar Port funding peaked in FY26, faces Rs 400 crore write-off in FY25-26.
• Bhutan remains top recipient, getting Rs 2,289 crore or 32.7% of FY27 assistance

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India’s external assistance spending is going through a subtle shift, with allocations to Latin American countries rising steadily over the past two years, while legacy strategic projects such as Chabahar Port have seen sizeable write-offs in the current fiscal.

Data from the Budget documents show that assistance routed through the Ministry of External Affairs to Latin American countries has increased sharply from Rs 2.8 crore in FY23 to Rs 51.1 crore in FY24, Rs 91.6 crore in FY25, and is budgeted at Rs 120 crore in FY27. As a share of total external affairs spending, Latin America’s allocation has risen from a negligible 0.1 percent in FY23 to 1.7 percent in FY27, indicating a gradual broadening of India’s development diplomacy beyond its immediate neighbourhood.

While the absolute sums remain modest compared with South Asia or the Indian Ocean region, the pace of increase is significant. Between FY23 and FY27, assistance to Latin America has risen more than 40-fold, contrasting with relatively flat or declining allocations to several Eurasian and neighbouring regions. For instance, assistance to Eurasian countries has fallen from Rs 83.9 crore in FY22 to Rs 38 crore in FY27, while Bangladesh and Afghanistan have also seen sharply reduced allocations over the same period.

At the same time, India’s long-running strategic investment in Chabahar Port has emerged as a fiscal drag. Budget data show a Rs 400 crore allocation in FY25 and FY26, classified under external assistance, with FY27 indicating no fresh provisioning. The FY25-FY26 allocations imply a Rs 400 crore write-off this year alone, sharply higher than the Rs 100 crore annual provisioning seen consistently between FY22 and FY24. As a share of external affairs spending, Chabahar peaked at 5.6 percent in FY26, up from just 1.5–2 percent in earlier years.

The contrast is stark when viewed alongside India’s neighbourhood-first commitments. Bhutan continues to dominate India’s external assistance portfolio, accounting for Rs 2,289 crore in FY27, or 32.7 percent of total spending. Nepal follows with Rs 800 crore, while Sri Lanka and the Maldives together account for nearly Rs 950 crore in FY27.