The Cabinet Committee on Economic Affairs (CCEA) has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 with an outlay of ₹2.55 lakh crore to help businesses weather the effects of the West Asian conflict. As per ETGovernment, Prime Minister Narendra Modi stated that ECLGS 5.0 reflects the Centre's commitment to supporting India's businesses, especially the MSME sector, in challenging global times. The scheme will provide ₹5,000 crore specifically for airlines facing short-term liquidity stress, with the government offering 100% credit guarantee for MSMEs and 90% for non-MSMEs and airlines on incremental loans. This represents the biggest scheme variant among all ECLGS versions, with the previous ECLGS 1.0 launched in May 2020 during the Covid-19 pandemic.
According to State Bank of India Research, the newly approved emergency credit guarantee scheme could benefit around 1.1 crore micro, small and medium enterprises (MSMEs) with additional credit flow of about ₹2-2.3 lakh per account. Under the scheme, additional credit for MSMEs and non-MSMEs will be capped at ₹100 crore, while airlines can borrow up to ₹1,500 crore per borrower, subject to certain conditions. According to ETGovernment, within these limits, MSME and non-MSME borrowers can avail credit up to 20% of peak working capital utilised during the last quarter of FY26, while airlines can avail up to 100%. The scheme will be applicable to all loans sanctioned up to March 2027, with the government guaranteeing these loans for their full duration. Most firms can take an additional loan of up to 20% of what they used as working capital in January-March 2026, capped at ₹100 crore. The loan tenure for MSMEs and non-MSMEs will be five years from the date of first disbursement, including a moratorium of one year, while for the airline sector it will be seven years, including a moratorium of two years.
According to SBI Research, the aviation sector was particularly vulnerable to the West Asia conflict because aviation turbine fuel accounts for 30-40% of operating costs, while higher fares and uncertainty were weighing on passenger traffic. ATF prices in Mumbai had risen about 35%, with increases ranging between 35% and 52% across metro cities. Outstanding bank credit to the aviation sector stood at ₹52,600 crore as of March 2026, up 14% year-on-year. At full disbursement, the proposed ₹5,000 crore support package would amount to about 9.5% of total outstanding aviation credit. The Ministry of Civil Aviation confirmed that the scheme will provide 90% credit guarantee coverage to Member Lending Institutions through the National Credit Guarantee Trustee Company Ltd. The scheme offers a seven-year loan tenure, along with an option to convert up to 50% of interest into a Funded Interest Term Loan, easing immediate repayment pressure and improving cash flows. Individual airlines may access up to ₹1,000 crore, extendable by another ₹500 crore if promoters infuse an equivalent amount.
According to Mint, the aviation sector is reeling under twin blows of the West Asia war and jet fuel price surge due to supply disruptions. Jet fuel accounts for 30-40% of operating costs of an airline, but since March, this has increased to nearly 50%, as reported by the industry body. Airlines had sought government support as they would have to suspend some international routes and ground aircraft unless the government lowered taxes on jet fuel for overseas flights. The sector has also seen domestic air traffic growth slow to 1.3% to 167.46 million in FY26, sharply down from over 7% growth in FY25. The finance ministry emphasized that the scheme aims to enable businesses to tide over challenges arising from the Gulf conflict, helping maintain operations, protect jobs, and sustain supply chains. By providing timely liquidity, the scheme will sustain businesses and prevent job losses while promoting uninterrupted domestic production and maintaining ecosystem resilience.
Alongside the ECLGS approval, the Cabinet Committee on Economic Affairs approved two semiconductor projects worth ₹3,936 crore under the India Semiconductor Mission (ISM). As per ETGovernment, Crystal Matrix Ltd will set up a ₹3,068 crore advanced packaging facility in Dholera, while Suchi Semicon Ltd will invest ₹868 crore in a new facility near Surat. Additionally, the CCEA approved three railway multi-tracking projects worth ₹23,437 crore - the third and fourth lines of the Nagda-Mathura, Guntakal-Wadi and Burhwal-Sitapur sections. These capacity augmentation works will result in additional freight traffic of 60 million tonnes per annum (MTPA). The CCEA also approved a ship repair facility at Vadinar in Gujarat with a ₹1,570 crore investment, jointly implemented by the Deendayal Port Authority (DPA) and Cochin Shipyard Ltd (CSL).
