Airlines such as SpiceJet and Akasa Air are seen as frontrunners to access the airline-specific window under the fifth edition of the Emergency Credit Line Guarantee Scheme (ECLGS), industry sources told businessline.

businessline has reported on April 13 that India was expected to cushion the impact of the West Asia crisis on its airline industry by allocating around ₹5,000 crore under a proposed new version of the ECLGS.

On Tuesday, the Union Cabinet approved ECLGS 5.0 to support credit flow of ₹2.55 lakh crore with up to 100 per cent government guarantee for micro, small and medium enterprises (MSMEs), non-MSME sectors, and airlines, including a separate ₹5,000 crore allocation for the aviation sector.

The Ministry of Civil Aviation said the scheme will provide 90 per cent credit guarantee coverage to Member Lending Institutions through the National Credit Guarantee Trustee Company Ltd to support additional credit extended to airlines facing liquidity stress due to the ongoing West Asia situation.

As per the ministry, the scheme offers a seven-year loan tenure, along with an option to convert up to 50 per cent of interest into a Funded Interest Term Loan, easing immediate repayment pressure and improving cash flows.

The scheme will provide additional credit of up to 20 per cent of peak working capital utilised during the fourth quarter of FY26, capped at ₹100 crore. For airlines, this may extend up to 100 per cent, capped at ₹1,500 crore per borrower, subject to conditions.

Speaking to businessline, sources said interest rates are expected at 9-10 per cent, along with a moratorium on interest servicing during the initial phase.

Besides, individual airlines may access up to ₹1,000 crore, extendable by another ₹500 crore if promoters infuse an equivalent amount.

The airline component will run for five years with a two-year extension, while the scheme will be applicable to loans sanctioned up to March 31, 2027.

Sources added that earlier versions of ECLGS supported businesses during Covid, and the current version is expected to aid airlines facing disruptions in routes, costs, and operations.

Published on May 6, 2026