The Union Cabinet has approved a fresh emergency credit guarantee scheme aimed at supporting the aviation sector and businesses facing liquidity stress linked to the ongoing West Asia situation.
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The Union Cabinet has approved a fresh emergency credit guarantee scheme aimed at supporting the aviation sector and businesses facing liquidity stress linked to the ongoing West Asia situation.
The decision, cleared on Tuesday, revives government-backed emergency lending support through the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 and extends additional credit access to airlines, MSMEs and other eligible businesses.
According to details shared by Information and Broadcasting Minister Ashwini Vaishnaw during a Cabinet briefing, the scheme will provide guarantee-backed loans through lending institutions supported by the National Credit Guarantee Trustee Company Limited (NCGTC).
The move comes as businesses continue to navigate operational and financial pressures arising from geopolitical disruptions, supply chain volatility and elevated operating costs.
Under the approved framework, scheduled passenger airlines can access additional credit support of up to 100% of peak working capital utilised during the fourth quarter of FY26, subject to a cap of ₹1,500 crore per borrower.
The Centre said eligible airlines must have outstanding credit as of March 31, 2026, and their loan accounts must be classified as standard.
For airlines and non-MSME borrowers, the government will provide 90% guarantee coverage to lending institutions through NCGTC.
The loan tenure for airlines has been fixed at seven years, including a two-year moratorium period.
Government officials said the scheme is intended to help aviation operators maintain business continuity amid disruptions linked to the West Asia conflict.
The scheme extends beyond aviation and includes MSMEs and non-MSME businesses with existing working capital facilities.
Key provisions include:
The government said the objective is to support business operations, preserve employment and stabilise supply chains affected by external geopolitical developments.
“The scheme will offer 100 per cent guarantee coverage for MSMEs and 90 per cent for non-MSMEs and airlines through the National Credit Guarantee Trustee Company Limited to lending institutions,” Ashwini Vaishnaw said at the press briefing, according to Business Standard.
Alongside the emergency credit package, the Cabinet Committee on Economic Affairs approved a higher fair and remunerative price for sugarcane and a new cotton productivity mission.
The government fixed the sugarcane FRP for the 2026-27 season at ₹365 per quintal at a recovery rate of 10.25%.
According to the official statement cited by Business Standard:
The government said the decision is expected to benefit nearly 5 crore sugarcane farmers and around 5 lakh workers employed in sugar mills and related industries.
The Cabinet also approved a ₹5,659.22 crore Mission for Cotton Productivity covering the period from 2026-27 to 2030-31.
The cotton productivity programme will focus on improving yields, strengthening quality standards and promoting climate-resilient agriculture.
According to the government statement, the mission will involve the Ministries of Agriculture and Textiles along with institutions including ICAR, CSIR and State Agricultural Universities.
The programme will initially cover:
The government aims to raise cotton production to 498 lakh bales by 2031 and increase productivity from 440 kg per hectare to 755 kg per hectare.
The latest Cabinet approvals indicate a broader attempt by the Centre to shield critical sectors from external economic shocks while supporting agricultural incomes and industrial productivity.
For the aviation sector, the renewed emergency credit window provides temporary liquidity support at a time when airlines continue to manage high fuel costs, currency pressures and regional operational uncertainty.
The implementation of ECLGS 5.0 over the next year will be closely watched by lenders, airline operators and industry stakeholders assessing the extent to which emergency-backed financing can stabilise cash flows and sustain operations during prolonged geopolitical volatility.
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