India ​plans to roll out sovereign credit guarantees ‌on loans worth $26.7 billion, aimed at ​supporting businesses, particularly small ⁠firms, affected by the Middle East crisis, two government sources said. Businesses, such as ‌textile and glass makers, have been hit by disruptions to ‌supply from the Middle East ‌due ⁠to the US-Israeli war with ⁠Iran. At the same time India, the world’s third-largest oil importer, also faces the risk ​of rising inflation ‌and slower growth.

The government is planning sovereign guarantees for four years to banks that lend to businesses, ‌similar to those provided during the ​deadly Covid-19 pandemic, both the sources said. This would cost ⁠the government about ₹17,000 crore to ₹18,000 crore ($1.83 billion to $1.94 billion), ‌they said.

India is planning to provide a guarantee of about 90 per cent on loans up to ₹100 crore ($10.75 million) to lenders in case borrowers default in the ‌aftermath of the crisis in the ​Middle East, both the sources said.

In 2020, India offered credit guarantees ⁠to support bank lending to businesses, including ⁠travel and tourism firms hit hardest by the COVID-19 pandemic, ‌to help them resume operations and pay their debts.

Published on April 7, 2026