ECLGS 5.0 expected to benefit 1.1 crore MSMEs and aviation accounts amid pressure from West Asia war — here's how
The newly approved Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 could potentially benefit around 1.1 crore MSME accounts, helping businesses tide over disruptions arising from the ongoing West Asia conflict, according to a report by State Bank of India (SBI).
The Union Cabinet's Emergency Credit Line Guarantee Scheme 5.0, which provides additional working capital to micro, small and medium enterprises and to some non-MSME sectors, including airlines, is likely to benefit 1.1 crore accounts, ANI reported, citing a State Bank of India report.
ECLGS 5.0 could help a number of businesses weather disruptions amid the war in West Asia, the report noted, adding that its estimates peg the beneficiaries at around 1.1 crore MSME accounts, or about 45% of MSMEs. They will each be eligible for an additional credit of ₹2-2.3 lakh on average, it added.
What does the ECLGS 5.0 scheme offer?
- Under the ECLGS 5.0 scheme, borrowers can get up to 20% of peak working capital during Q4FY26, capped at ₹100 crore.
- For airlines, this credit line has been extended to 100% of peak working capital during Q4FY26, capped at ₹1,500 crore each.
- The government's overall additional capital flow target is ₹2.55 lakh crore, including ₹5,000 crore for the aviation sector alone, the report added.
What is the expected impact of ECLGS 5.0?
“Timely intervention will ensure liquidity support, protect jobs, sustain supply chains, and strengthen the resilience of the Indian economy,” as per an SBI report, which pointed to the scheme's “stabilising” and financial support for MSMEs during the COVID-19 pandemic.
- As per the report, ECLGS schemes have prevented large-scale stress in the MSME sector over the years and rescued some 13.5 lakh accounts from non-performing asset (NPA) status.
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ECLGS 5.0 is an Emergency Credit Line Guarantee Scheme providing additional working capital to MSMEs and certain non-MSME sectors, including airlines. It is expected to benefit approximately 1.1 crore MSME accounts and aims to support businesses facing disruptions due to external factors like the West Asia war.
MSME borrowers can receive up to 20% of their peak working capital during Q4FY26, capped at ₹100 crore. For airlines, this credit line is extended to 100% of their peak working capital during Q4FY26, capped at ₹1,500 crore per airline.
Unlike earlier schemes that addressed domestic demand collapse during COVID-19, ECLGS 5.0 is designed to counter external shocks such as supply chain disruptions and rising input costs caused by geopolitical events like the West Asia war.
ECLGS 5.0 provides a credit line of up to ₹1,500 crore for airlines, with a government guarantee, to help them navigate short-term liquidity challenges. This support is crucial amid rising fuel prices and global disruptions affecting airline operations.
The scheme has an overall target of ₹2.55 lakh crore in additional capital flow, with ₹5,000 crore earmarked for the aviation sector. It aims to ensure liquidity support, protect jobs, sustain supply chains, and strengthen the resilience of the Indian economy.
- In September 2025, gross NPA levels among MSMEs fell significantly to 3.3% from 11% in March 2020 — largely due to ECLGS support, it added.
- For airlines, the report expects ECLGS 5.0 to provide similar support amid soaring fuel prices and pressure from international travel due to the war. Outstanding credit in the sector stood at ₹526 billion as of March 2026, up 14% year-on-year (YoY).
- It estimates that if the ₹5,000 earmarked is allocated, close to 9.5% of the aviation sector's outstanding would be cleared.
- On MSME credit growth in FY26, SBI Research estimates that this has expanded to about 27% and now comprises 18.5% of total bank credit.
(With inputs from ANI)
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