INDIA’S cabinet yesterday approved a new emergency credit guarantee programme worth 181 billion rupees ($1.9bn) to support businesses – particularly small firms – facing short-term liquidity stress linked to the Middle East crisis, the information minister said after a cabinet meeting.
The Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 will provide additional credit support to eligible borrowers, with the government offering 100 per cent guarantee coverage for small and medium enterprises and 90pc coverage for other firms and the airline sector, a government statement said.
The guarantees will be routed through the National Credit Guarantee Trustee Company Ltd.
Businesses such as textile and glass makers have been hit by supply disruptions from the Middle East amid the US-Israeli war with Iran. At the same time, India – the world’s third-largest oil importer – faces risks of higher inflation and slower growth.
The scheme will cover additional loans extended by member lending institutions to borrowers with standard accounts and existing working capital limits or outstanding credit facilities as of March 31, 2026.
Under the plan, borrowers can raise up to 20pc of peak working capital used in the January-March quarter of fiscal 2026, capped at 1bn rupees. Scheduled passenger airlines can borrow up to 100pc of outstanding credit facilities, capped at 15bn rupees per borrower, subject to conditions.
Loans for businesses will run for five years, including a one-year moratorium, while airline loans will have a seven-year tenor with a two-year moratorium.
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