New Delhi has approved a $2 billion credit guarantee initiative for sectors, including aviation, impacted by the ongoing conflict
India has rolled out a credit guarantee initiative to support businesses affected by the Middle East conflict.
The federal government announced the $2 billion capital allocation plan, the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, on Tuesday. The ECLGS facility was first introduced in May 2020 to support businesses impacted by the Covid-19 pandemic.
The plan is expected to enable additional credit flow of $3.5 billion. The borrowing cap for passenger airline companies has been set at $160 million.
“The scheme has been brought to address the stress in MSME and airline sectors due to the West Asia conflict,” Union Minister Ashwini Vaishnaw said.
The Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 approved by the Cabinet reflects our commitment to supporting India’s businesses, especially the MSME sector in challenging global times. By enabling additional credit flow with strong guarantee coverage, this initiative will…
— Narendra Modi (@narendramodi) May 5, 2026The initiative will be applicable for loans sanctioned under the plan until March 31 next year.
The loans for the airline sector, battling high jet fuel prices and stress, will have a seven-year tenor, including a two-year moratorium. For businesses, the loans will be for five years, including a one-year moratorium.
The aim is to help maintain operations and supply chains, in addition to protecting jobs amid the crisis spurred by the Middle East conflict.
The guarantees will be routed through the National Credit Guarantee Trustee Company Ltd.
Read more Indian airlines seek government help on jet fuel pricesMost businesses have been hit by supply disruptions arising from the Middle East conflict, triggered by the strikes launched by the US and Israel on Iran in February. India, the world’s third-largest oil importer, also faces risks of higher inflation and slower growth.
In April, Indian airline companies sought government help to cushion surging jet fuel prices due to the conflict in the Middle East, which accounts for nearly 55% of crude oil imports.
More than 15,400 flights operated by Indian carriers were canceled from February 28 to April 24.
An industry body that represents the top carriers, including Air India, IndiGo, and SpiceJet, has urged “urgent support” from the government on ATF pricing to continue airline operations.
Rating agency Moody’s has cut India’s GDP projection for the 2026-27 fiscal year to 6% from 6.8%, citing subdued private consumption, softer industrial activity, and higher input costs.
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