Govt clears ₹50,000-crore package to boost credit flow and support businesses

The Union cabinet on Tuesday approved a ₹18,100-crore support package to cushion businesses from liquidity stress from the ongoing West Asia crisis. The allocation, which is the fifth edition of the Emergency Credit Line Guarantee Scheme (ECLGS), was part of a series of amounts approved for sectors including shipping, railways and electronics, totalling ₹50,000 crore.

The government-backed loan support scheme will facilitate an additional credit flow of up to ₹2.55 trillion to the economy, including ₹5,000 crore specifically for the aviation sector, a government statement said.

"The Emergency Credit Line Guarantee Scheme 5.0 approved by the Cabinet reflects our commitment to supporting India’s businesses, especially the MSME sector in challenging global times. By enabling additional credit flow with strong guarantee coverage, this initiative will help a wide range of sectors. Our focus remains on empowering enterprises, sustaining growth momentum and safeguarding livelihoods," Prime Minister Narendra Modi wrote on X.

Briefing reporters after the cabinet meeting, information and broadcasting minister Ashwini Vaishnaw said that the new ECLGS 5.0 is designed to help businesses tide over short-term liquidity mismatches triggered by geopolitical disruptions. The scheme offers a 100% guarantee for micro, small and medium enterprises (MSMEs) and 90% coverage for non-MSMEs as well as airlines, on the amount in default for the additional credit facility.

"This (ECLGS 5.0) timely intervention will unlock significant credit flows, ease working capital pressures, and help sustain operations and employment across the sector," Said Vinod Kumar, president of India SME Forum.

Under the scheme, borrowers can avail additional credit of up to 20% of the peak working capital utilised during the fourth quarter of FY26, subject to a cap of ₹100 crore. For airlines, the support can extend up to 100% of their working capital requirements, capped at ₹1,500 crore per borrower, subject to specific conditions. The scheme carries no guarantee fee, reducing the cost burden on borrowers. The loan tenor for MSMEs and other eligible businesses has been set at five years, including a one-year moratorium on principal repayment. For airlines, the tenure is longer at seven years, with a two-year moratorium.

Vaishnaw said that the government also approved fair and remunerative price (FRP) of sugarcane for Sugar Season 2026-27 (October-September) at ₹365 per quintal, which would result in more than ₹1 trillion benefit to farmers through higher payments by millers.

The government also approved ₹5,659.22 crore for the Mission for Cotton Productivity (2026–27 to 2030–31) to boost output through development of high-yielding variety seeds.

The mission aligns with the government’s 5F vision—Farm to Fibre to Factory to Fashion to Foreign—aimed at boosting production, enhancing value addition, and expanding exports of high-quality apparel.

"The Mission envisages to accomplish the production of 498 lakh bales (170 kg lint each) of cotton by enhancing lint productivity from 440 kg per hectare to 755 kg per hectare by 2031. Approximately 32 lakh farmers will be benefitted, leading to self-reliance," said Vaishnaw, who also holds information technology and railways portfolios.

The Union cabinet also approved two more semiconductor projects under India Semiconductor Mission (ISM). These include the country’s first commercial mini/micro-LED display facility based on gallium nitride (GaN) technology and a semiconductor packaging facility. Crystal Matrix td will establish an integrated facility for compound semiconductor fabrication and assembly, testing, marking and packaging (ATMP) in Dholera, Gujarat for manufacturing mini/micro-LED display modules.

Suchi Semicon Private Ltd will be setting up an outsourced semiconductor assembly and test (OSAT) facility in Surat, Gujarat, for manufacturing discrete semiconductors.

The two proposals will set up semiconductor manufacturing facilities in Gujarat with a cumulative investment of around ₹3,936 crore and are expected to generate cumulative employment for 2,230 skilled professionals.

The Cabinet Cabinet Committee on Economic Affairs (CCEA), which also met on Tuesday, approved the development of a state‑of‑the‑art ship repair facility at Vadinar, Gujarat, marking a major expansion of the national ship repair ecosystem. The project will be jointly implemented by Deendayal Port Authority (DPA) and Cochin Shipyard Limited (CSL), with a combined investment of ₹1,570 crore.

The CCEA also approved three multitracking projects worth ₹23,437 crore for the ministry of railways, covering 19 districts across Madhya Pradesh, Rajasthan, Uttar Pradesh, Karnataka, Andhra Pradesh and Telangana, increasing the existing network of Indian Railways by about 901 Kms.

The cabinet also took steps to increase the number of judges in the Supreme Court to allow the judiciary to function more efficiently and effectively. It approved the proposal for introducing The Supreme Court (Number of Judges) Amendment Bill, 2026 in Parliament to amend The Supreme Court (Number of Judges) Act, 1956 for increasing the number of Judges of the Supreme Court of India by 4 from the present 33 to 37 (excluding the Chief Justice of India).

Meanwhile, Indian Sugar & Bio-Energy Manufacturers Association(ISMA) welcomed the government's decision to increase the Fair and Remunerative Price (FRP) of sugarcane by ₹10 per quintal to ₹365 per quintal for the 2026-27 sugar season (Oct 2026-Sep 2027). "The farmer-friendly move will benefit about 5.5 crore sugarcane farmers, injecting an additional ₹15,000-20,000 crore in income (total cane payments about ₹1.3 lakh crore)," said Deepak Ballani, director general, ISMA.

(with inputs from Harsh Kumar)