New Delhi7 minutes ago
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Union Minister Ashwini Vaishnav informed about the decisions taken in the cabinet meeting.
The Union Cabinet has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0. Through this, small industries (MSMEs) will be able to take loans up to ₹100 crore and airline companies will be able to take loans up to ₹1500 crore.
This loan will be available without any guarantee. For this, the Government National Credit Guarantee Trustee Company Limited (NCGTC) will provide up to 100% credit guarantee cover to banks and financial institutions under this scheme.
Union Minister Ashwini Vaishnav told after the meeting on Tuesday that this decision has been taken to deal with the financial crisis caused by the ongoing war between America and Iran. This will help companies keep their business running, save jobs and strengthen the supply chain. This scheme will remain in force till 31 March 2027.
Due to cost of jet fuel increasing by 20%, the Federation of Indian Airlines (FIA) had written a letter to the government demanding relief.
Center will distribute loans worth Rs 2.55 lakh crore
The government will provide a total of Rs 2.55 lakh crore under the scheme, in which there will be a loan reserve of Rs 5,000 crore for airlines. However, the loan limit has been fixed differently.
MSMEs and other businesses: Will be able to avail additional loan up to a maximum of 20% of the working capital (expenses of running the business) used during the fourth quarter (FY 2026). However, they will be able to take a maximum loan of up to Rs 100 crore.
For the airline sector, this limit has been kept up to 100%, where a company can take a maximum loan of Rs 1,500 crore.
You will get more time to repay the installment
There will be relief in the loan repayment period also:
- The loan tenure for MSMEs and other businesses will be 5 years, in which the facility of moratorium (payment of interest only) will be available for the first 1 year.
- For the airline sector, the period has been kept at 7 years, which includes a moratorium of 2 years.
100% guarantee cover on loans to MSMEs
| category | guarantee cover | loan period | Moratorium |
| MSMEs | 100% | 5 years | 1 year |
| Airlines | 90-100% | 7 years | 2 years |
| Non-MSMEs | 90% | 5 years | 1 year |
Government will take 100% risk, will not have to pay any fees
The specialty of ECLGS 5.0 is its guarantee cover. The government will provide 100% guarantee for MSMEs, while 90% guarantee cover will be available for non-MSMEs and airline sectors. This means that if a company defaults, the government will compensate for the loss. The special thing is that banks or customers will not have to pay any fee for this guarantee.
Who will get the benefit: Only standard accounts till March 31, 2026 are eligible
The benefit of this scheme will be available only to those MSMEs, non-MSMEs and passenger airlines whose accounts are in ‘Standard’ category (i.e. those who are paying installments on time) till March 31, 2026. This scheme will be applicable to all loans sanctioned till March 31, 2027.
Two semiconductor plants also approved
The Cabinet has approved two more semiconductor projects under the India Semiconductor Mission (ISM). This includes the country’s first commercial mini/micro-LED display unit, which will be based on GaN (Gallium Nitride) technology. Along with this, a semiconductor packaging plant has also got the green signal.
After getting the approval, both these semiconductor plants will be set up in Gujarat. There will be a total investment of about Rs 3,936 crore on these. These projects are expected to provide employment to about 2,230 skilled professionals.
‘Mission for Cotton Productivity’ approved
The Cabinet has approved ‘Mission for Cotton Productivity’. The government will spend Rs 5659.22 crore for this mission to run from 2026-27 to 2030-31. Its objective is to remove the obstacles, decreasing production and quality related problems in the cotton sector of the country.
Knowledge Part: What is Moratorium and Credit Guarantee?
Credit Guarantee: When the government takes guarantee of a loan, banks give the loan without any fear and without any security, because they know that the government will compensate if the money is lost.
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