Union Cabinet of India has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, including a dedicated ₹5,000 crore credit support window for Indian airlines facing mounting financial pressure from rising fuel costs, airspace disruptions and reduced international operations.
The decision, cleared under the leadership of Prime Minister Narendra Modi, is aimed at stabilising the aviation sector amid ongoing operational and liquidity challenges.
Under the scheme, airlines will receive sovereign-backed credit support with up to 90% government guarantee coverage, while eligible borrowers can access loans of up to ₹1,000 crore, with an additional ₹500 crore possible through equivalent equity infusion.
The loans will carry a tenure of up to seven years, including a two-year moratorium, along with an option to convert up to 50% of accrued interest into a Funded Interest Term Loan.
The government said the move comes in response to financial stress triggered by sharp increases in Aviation Turbine Fuel prices, exchange rate volatility, restricted airspace access and lower aircraft utilisation, particularly on international routes.
Civil Aviation Minister Ram Mohan Naidu said the measure, combined with earlier interventions such as ATF price rationalisation and lower airport charges, is intended to help airlines navigate short-term liquidity pressures while safeguarding employment and connectivity.
Industry observers describe the package as a major stabilisation measure for India’s aviation ecosystem, helping maintain operational continuity and lender confidence during a period of global uncertainty.
The broader ECLGS 5.0 framework is expected to facilitate total credit flow of ₹2.55 lakh crore across sectors.
