The Indian government on Tuesday approved an Emergency Credit Line Guarantee Scheme (ECLGS 5.0) with an outlay of Rs 18,100 crore to support Micro, Small and Medium Enterprises (MSMEs) and the airline sector impacted by the West Asia conflict. The scheme, cleared by the Union Cabinet, is expected to facilitate an additional credit flow of Rs 2.55 lakh crore, including Rs 5,000 crore earmarked for airlines.

Information and Broadcasting Minister Ashwini Vaishnaw, briefing the media, said the scheme aims to address liquidity stress in both sectors caused by the ongoing regional crisis. Passenger airlines will be eligible for up to 100% of peak credit up to Rs 1,500 crore, while non-MSME institutions can access up to 20% of fund-based working capital, capped at Rs 100 crore. The National Credit Guarantee Trustee Company (NCGTC) will provide 100% guarantee coverage for MSMEs and 90% for non-MSMEs and airlines.

The loan tenor for airlines is set at seven years, including a two-year moratorium, while MSMEs and non-MSMEs will receive five-year terms with one year of moratorium. The scheme will cover loans sanctioned from the date of NCGTC's guidelines until March 31, 2027. Civil Aviation Minister K Rammohan Naidu called it a critical measure to sustain aviation operations and protect jobs amid global disruptions.

The government said the scheme will help maintain business continuity, protect employment, and ensure resilience in supply chains. Officials stated that timely liquidity infusion would prevent cascading defaults and support domestic production. The scheme's implementation will be monitored by the Department of Financial Services and NCGTC.

The Union Cabinet's decision follows growing financial strain on MSMEs and airlines due to rising fuel costs and disrupted routes stemming from the West Asia conflict. The government will now issue operational guidelines for banks and financial institutions to begin sanctioning loans under the scheme.