Centre clears Rs 5,000 crore emergency credit line for airlines amid ATF price surge

The Union Cabinet on Wednesday approved a Rs 5,000 crore emergency credit line for Indian airlines amid a sharp rise in Aviation Turbine Fuel (ATF) prices linked to the ongoing West Asia crisis. The financial support package was cleared under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to address liquidity stress faced by airlines due to higher fuel costs, airspace restrictions and reduced international operations. The decision was approved during a Cabinet meeting chaired by Prime Minister Narendra Modi.

According to the Ministry of Civil Aviation, the scheme is intended to provide targeted credit support to airlines facing operational and financial pressure caused by rising ATF prices, lower aircraft utilisation and disruptions on several international routes. The government stated that the aviation sector has also been affected by exchange rate volatility and temporary airspace closures linked to the Middle East situation, resulting in increased financial strain on carriers.

Under the scheme, eligible airlines will receive structured financial relief through guaranteed loans. The government stated that the Emergency Credit Line Guarantee Scheme 5.0 will provide 100 percent credit guarantee coverage for MSMEs and 90 percent coverage for non-MSME borrowers in the airline sector through the National Credit Guarantee Trustee Company Limited. The package includes a maximum loan limit of Rs 1,000 crore per borrower, with an additional Rs 500 crore available subject to equivalent equity infusion by the borrower.

Officials stated that the loans sanctioned under the scheme will have a tenure of up to seven years, including a two-year moratorium period on repayment. The Ministry of Civil Aviation said the arrangement is designed to help airlines manage short-term liquidity mismatches and maintain uninterrupted operations during the ongoing disruptions affecting the aviation industry.

Civil Aviation Minister Ram Mohan Naidu stated that the approval of ECLGS 5.0 is aimed at helping airlines navigate operational and financial challenges arising from global disruptions. The ministry added that the scheme is expected to support employment, maintain air connectivity and strengthen stability within the aviation ecosystem during the period of elevated fuel costs and operational uncertainty.